Port Strategy July/August 2019

JULY/AUGUST 2019 â?˜ VOL. 1019

ISSUE 6

portstrategy.com

INSIGHT FOR PORT EXECUTIVES Adriatic capacity boost | Posorja issues raised | Black Sea builds momentum | USWC spotlight

EXPECT A RETHINK: System changes, limits reached?

The international magazine for senior port & terminal executives EDITORIAL & CONTENT Editorial Director: Mike Mundy mmundy@portstrategy.com Guest Editor: Mike Mundy mmundy@portstrategy.com News Reporter: Rebecca Jeffrey rjeffrey@mercatormedia.com

VIEWPOINT MIKE MUNDY ❘ Editor

Time for a fresh approach

It is easy to see how the business climate overall is acting as a catalyst for a re-think – ‘belt tightening’ the order of the day

The beginning of July marked another landmark moment in the evolution of the container system – the delivery of the MSC Gulsun, the first box ship to be built to accommodate 24 rows of containers on deck and featuring a capacity of around 23,000TEU. Yet another step up in containership dimensions and a further way point along the extraordinary escalation in container ship size that has taken place over recent years.

The MSC Gulsun is the first of 11 vessels of her class to be delivered to MSC and, as might be expected, is now in service in Asia-Europe trade.

It might be true to say, however, that the arrival of the Gulsun and other vessels like her over coming months is at least to some extent a manifestation of the previous over-confidence of liner operators – a view supported by various industry analysts.

The question has also been raised do Ultra Large Container Vessels (ULCVs) really deliver the level of benefit hoped for? Clearly there are doubts and these also seem to be reflected in moves afoot by carriers and others to look elsewhere to secure acceptable margins – along the supply chain for example.

Additionally there is growing recognition that global container trade is slowing underpinned by a tightening economic climate. Significantly, this view was voiced recently by Soren Skou, chief executive of A.P. Moller-Maersk, the world’s number one liner operator, in TEU capacity terms. “We clearly see a global economic growth that is declining. We see weaknesses, in particular, in China and Europe. We expect container demand growth to fall to 1% to 3% this year (2019) from 3.8% last year (2018),” he stated in a presentation to investors.

For liner operators there are also what can be termed other ‘internal challenges,’ not the least of these being compliance with the new IMO 2020 ruling that will cut sulphur emissions from ships’ stacks. This is forecast to raise fuel costs by up to one third – how will it be paid for?

It is easy to see how the business climate overall is acting as a catalyst for a re-think – a shift away from pursuing vessel-based scale economies.

It is reasonable to expect that an integral part of this will be a general ‘tightening of the belt,’ as again evidenced again by Maersk which notes a new more disciplined approach to capital expenditure.

And it is further reasonable to expect that this ‘belt tightening’ will be appropriate in other sectors of the container industry, not least the port and terminal sector. Expect, for example, increased emphasis on risk management right through from annual contract renewals to new project assessment. There seems to be a growing case for this type of ‘readjustment’ which can also be interpreted as the greater adoption of a focus taken much more seriously following the financial crisis of 2008-09.

The positive side of this story is, however, that the container sector today is empowered by knowledge, experience and a proven ability to innovate to efficiently navigate the challenges thrown at it.

It is in this respect as a leading industry media that Port Strategy can continue to take a prominent position, disseminating the cutting-edge intelligence that facilitates progress. The challenges may be different but the objective remains the same - to deliver real, industry focused intelligence that promotes business efficiency.

For the latest news and analysis go to www.portstrategy.com/news

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CONTENTS

JULY/AUGUST 2019

13 14 NEWS

FEATURES

11

19 Investment in Black Sea Ports Ongoing

COLUMNS

16 DPW Questions in Ecuador DPW questioning comments from Comptroller in Ecuador, as investigations into the terminal award continue.

13 The Good, the Bad & the Ugly

18 Robust Exports from Oakland

The global economy is in a state of flux and various indicators seem to be sending conflicting messages

Agricultural exports are proving to be strong as Asian countries outside China are targeted by US producers.

10 Controversy Stirring in Buenos Aires Government plans for a single operator at the port are known, but the investment process will not be straightforward, while the sceptre of automation also looms

11 Capacity Needed at Indian Ocean Ports Toamasina and Port Victoria are both planning to expand to keep pace with trade demand requirements

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33

13 The Highway to Profitability A new container terminal study addressed the crucial question of risks and uncertainties to these assets and identifies how it is possible to ‘stay ahead of the game’

14 Ecosystems and Wedding Venues Ports are part of ecosystems, but do relevant parties actually talk to each other?

A potential new Ferry Terminal in New York answers the question.

For the latest news and analysis go to www.portstrategy.com/news

Investment is either ongoing or planned in a number of Black Sea ports for containers and grain, but the drivers behind this activity varies from supporting economies through to political will..

24 China, IT and Regulations the Focus at US West Coast Ports A combination of regulations, the potential us of IT and the ongoing uncertainties caused by trade with China remain the focus for ports located on the US West Coast.

33 No Slick Response Ports need to take a hard look at their responses to oil spills, right down to the architecture and options available.

38 Bollards Stressed Beyond Capacity Bollard capacities on a global basis are facing the challenge of rapidly expanding newbuild ship sizes. The view of insurers must also be considered.

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JULY/AUGUST 2019 | 5

THE STRATEGY

POSORJA: COMPTROLLER IDENTIFIES ISSUES DP World has, via a press release issued in Ecuador, expressed surprise at the conduct of the General Comptroller of the State of Ecuador, following draft findings into the process of award and concession terms for its new deep-water facility at Posorja being released.

The Comptroller alleges a number of key areas where irregularities have been determined, namely: 5 That the award of the concession on a sovereign state to sovereign state basis was improper, DP World being an entity which is invested in by a range of investors and as such not a wholly-owned state company.

5 That the concession fees for Posorja are effectively too low, meaning the state will miss out on $185.5 million in concession rights revenue. This, the Comptroller alleges, is due to ‘unjustified changes in the final concession proposal submitted

by DP World.

The Port of Felixstowe in the UK has increased its range of intermodal rail destinations through a new service operated

by GB Railfreight, which will increase the current levels of around 910,000 TEU moving via this mode of transport.

This total represents around 27% of the port’s total domestic container volumes handled now utilising the existing rail capabilities, of which 50% is

5 That tax Incentives were applied to the project in an unlawful way resulting in a benefit to DP World Investments of $317,875,000.

Generally, the Posorja project continues to be the source of ongoing investigations

by the current administration. A central theme persists, that there have been significant shortfalls in serving the public interest and non-compliance with national planning regulations.

The project was awarded under the auspices of the previous

8 Controversy continues to surround DP World’s Posorja project

government in Ecuador, with several parties involved now under personal investigation. The story looks set to rumble on for some time yet.

FELIXSTOWE UPS RAIL CONNECTIVITY moving to/from the North and West Midlands areas of the UK. The new destination ensures a connection with the new 30-acre multimodal iPort logistics site in Doncaster, adjacent to the M18 motorway in South Yorkshire.

The site is already used by wellknown names such as Amazon, CEVA and Lidl. iPort also supplements the existing intermodal rail service profile at Felixstowe, which consisted of 66 daily arrivals/

departures from three rail freight companies (in addition to GB Railfreight are Freightliner Ltd and DB Schenker Rail (UK) Ltd) to 15 inland destinations, including Glasgow, Manchester, Liverpool, Leeds, Birmingham and Cardiff.

Continued and increasing use of intermodal rail cannot also be underestimated in terms of its positive impact on the wider environmental position by helping to remove truck traffic from an

already highly utilised road network.

The port has confirmed that it is currently seeing almost 1.5 million TEU moving to/from its terminals to the Northern Powerhouse area annually, so the need for additional rail access is required.

The Port of Felixstowe has confirmed that since opening its North Rail Terminal in 2013 a further 500,000 truck movements have been removed from UK roads, which has also reduced carbon emissions by 100,000 tonnes.

New Dunkirk call from CMA CGM

MSC Gayane released from Philadelphia

Algeciras gains new Asian Call

Container newbuilds drop in Q2 2019

CMA CGM and the Ocean Alliance (CMA-CGM/COSCO/OOCL/ APL/Evergreen) have introduced a new call at Dunkirk on a major Asia/Europe service, known by the lines respectively, as the FAL3/AEU6/LL5/FX3/FAL3 service. In addition, existing calls at Cai Mep and Antwerp have been dropped, with new eastbound calls at Jebel Ali and Port Kelang included in the schedule from mid-July.

The MSC vessel at the centre of one of the largest cocaine seizures in a US port finally set sail after several weeks of being firmly entrenched at the Port of Philadelphia. The 9,962 TEU ship was raided on June 16th but was unmoved for several weeks, with US attorney William McSwain even stating that it may be impounded indefinitely. Around 18 tonnes of cocaine was found on the vessel with a reported street value of US$1,3 billion.

A new call to Algeciras is to be undertaken by the ocean Allianceand CMA CGM. From the middle of July, Le Havre, Jebel Ali and Xiamen have been dropped on the FAl1/Aeu2/ ll4/FX1 service with Algeciras added as the last port before/after Asia. Removing Le Havre means that cargo to/from France will be met via a newly added Dunkirk call onthe FAL3 CMA CGM option.

Container new ship orders for Q2 2019 were down by almost 50%, compared to the same period of 2018. Of the 48 orders placed, the largest was from Sinokor, who ordered 16 Feedermaxes of 1,100 TEU to be built by Chinese shipyards by 2020 and four Handy containers of 1,800 TEU from South Korea’s Hyundai Mipo ship yard. These orders actually accounted for an estimated 42% of all orders in 2019 to date.

BRIEFS

6 | JULY/AUGUST 2019

For the latest news and analysis go to www.portstrategy.com/news

THE STRATEGY

CANADIAN PORT IN LINE FOR CAD$17m

BRIEFS

Credit: Port of Belledune

Lianyungang and Batumi sign MoU

The Government of Canada will invest CAD$17m in the Port of Belledune to increase capacity and help move Canadian goods to international markets.

Work will include filling in the water gap between Terminals 3 and 4 to create a larger berth, thereby improving the port’s ability to move cargo between the terminals, and to and from vessels. This work will also create additional space for commodities at the south end of Terminal 3.

Serge Cormier, parliamentary secretary to the Minister of Defence and Member of Parliament for Acadie – Bathurst, said: “I am thrilled that this important project is going ahead.

Transportation and distribution of goods are a vital part of our local, regional and national economies.

“These improvements to the Port of Belledune will increase transportation options for the community, help businesses get more products to market, and create quality jobs.

8 Government funding will pay for filling in the water gap between Terminals 3 and 4 to create a larger berth

“This investment demonstrates that our government appreciates how important our port is to the continuing prosperity of our region and country.”

The investment is expected to have important economic and employment benefits for the region by creating an estimated 340 jobs during construction.

ICTSI LEADS INVESTMENT IN ADRIATIC ICTSI is increasing the capacity and infrastructure offered at its Adriatic Port Gateway facility, located at the Port of Rijeka.

Adriatic Gate Container Terminal (AGCT) has announced plans for a project expansion which involves a two-phase dredging scheme, with the ability to berth ships with a length overall (LOA) of up to 400m by the mid-2020s.

The port is looking to "keep pace" with ship sizes, to allows container vessels of up to 20,000 TEU in size to call. Dean Davison, Technical Director at WSP commented: “Water depth is a crucial factor because the 2M Maersk Line/MSC AE2/TP2

service currently calls to the Adriatic region with vessels of up to 13,630 TEU from Asia.”

The investment comes at a time when other ports are equally active in increasing competitiveness. Following a visit to Italy of China's President Xi Jinping earlier this year, Trieste is actively targeting a key role in supporting China's One Belt, One Road initiative.

Rail is a key factor supporting Adriatic ports. AGCT has introduced two new rail-mounted gantry cranes to increase rail capacity to 360,000 TEU per annum as the share of rail activity at the facility rises from the

For the latest news and analysis go to www.portstrategy.com/news

current 40% to short-term estimated level of 60%.

At the same time, the Port of Koper is introducing new rail routes to serve one of its key markets, Austria. With current demand through the port at 225,000 TEU (a six-fold rise since 2009), new twice-weekly services to Enns and Salzberg complement the existing 10 weekly links to Graz.

Investment is clearly ongoing in the Adriatic region, for both maritime and landside activities. Of course, it is also important to remember that making new capacity is itself a challenge and is equally important to the success of any project.

The Georgian port of Batumi and China’s Lianyungang port have signed a Memorandum of Understanding (MoU).

According to ministry sources in Georgia, the two ports discussed the role of Georgia in helping to support the Belt and Road initiative, which included a “Central Corridor” project. Batumi is one of several planned developments in Georgia to serve China’s new Silk Road, with plans at this facility to store additional quantities of mineral fertilisers.

2m + Zim strengthen ties The 2m Alliance of Maersk Line and Mediterranean Shipping Co (MSC), plus Zim, have strengthend their vessel sharing and slot purchasing ties. Two further services are commencing in mid-August, starting with the TP88/Pelican/ Zim US Gulf-South China Express (ZGX) offering. It will use 10 x 4,500 TEU vessels and link Xiamen, Yantian and Pusan with the US Gulf via the Panama Canal. Also, Zim will purchase space on the 2M’s TP18/Lone Star Express service, with Zim naming its option as Zim US Gulf Central China (ZGC). US Gulf ports will be linked with Nignbo, Shanghai and Pusan via the Panama Canal and utilise 10 x 6,500 TEU ships.

Ho Chi Minh the Loser APL and ANL have ceased calling to Ho Chi Minh on the joint AAX2 service that links Asia and Australia. In addition, the schedule is being downgraded from weekly to every two weeks, likely due to weaker demand requirements.

The remaining ports of call will be Port Kelang, Singapore, Jakarta, Brisbane, Sydney and back to Port Kelang.

JULY/AUGUST 2019 | 7

THE STRATEGY

BRIEFS

OAKLAND EXPORTS STRONG

Full membership for HMM

Deployment of new TEU ships confirmed Mediterranean Shipping Co (MSC) has confirmed that it will be placing 4 of its new 23,000TEU ships into service by mid-November 2019. There are 11 vessels of this size in total ultimately due. The first batch of ships will be deployed on the Asia-Europe trade, on the 2M Alliance AE10/Silk service that MSC operates jointly with Maersk Line. which MSC. The first ship is the MSC Gulsun, which is the first of 6 units being built by Samsung, to be followed by 5 ships under construction by Daewoo. It is also recognised as being the current largest container ship, with 24 rows across. This compares to 21 rows for the Emma Maersk, which is also three metres shorter. These new 23,000 TEU vessels will be replacing existing tonnage which is in the 18,000 TEU – 20,000 TEU size range, resulting in additional slot capacity.

APL see Shekou Value APL is adding a new port call in Shekou to its existing North/South loop of the Korea/China Straits service (KCS). The new port call will sit between Yantian and Nansha.

8 | JULY/AUGUST 2019

Credit: Port of Oakland

From April 1, 2020, HMM will be a full member of THE Alliance, subject to all necessary regulatory approvals. At the same time, the four member lines of THE Alliance, HMM, Hapag-Lloyd, Yang Ming and Ocean Network Express (ONE) confirmed an intention to extend their partnership for 10 years until 2030. HMM’s 12 x 23,000 TEU ships due to be delivered in Q2 2020 will join the alliance’s Asia-North Europe service offerings.

The Port of Oakland has said that agricultural exports to Asia are robust and exports to China rose 5% over last year in the first quarter of 2019, despite the USChina tariff standoff, but warned caution should still be exercised.

It added that farm good shipments in the first quarter of 2019 have increased 12% over last year. In 2018, Oakland’s worldwide agriculture exports declined 10%.

“It’s too soon to declare victory in this segment given the trade outlook,” said Port of Oakland maritime director John Driscoll.

“But our performance so far this year shows two things: there’s

continued demand for U.S. farm goods and growers are resourceful when it comes to finding markets for their products.”

Through April, the port said it had exported the equivalent of 108,724 20-foot-containers loaded with farm products. That was up from 97,376 containers in the same time frame last year. According to port data, most of those shipments went to Asia.

The port said Asian markets outside China accounted for most of the growth in Oakland agricultural exports. Among the leading destinations were Taiwan, Vietnam, South Korea and Japan.

8 Port of Oakland Asian markets outside China have accounted for most of the growth in Oakland agricultural exports

The port said US producers have turned to those destinations since China imposed tariffs on American farm goods, making them more expensive for overseas buyers.

Agricultural commodities account for about 37% of all international exports shipped from Oakland, the port said. The farm goods range from containerised rice to dried fruits, nuts and refrigerated beef. Approximately 11% of Oakland’s agricultural shipments have gone to China so far, this year.

STOPPAGES BY WORKERS IN KEY AUSTRALIAN PORTS The Maritime Union of Australia (MUA) called a 48-hour strike at DP World’s Brisbane, Fremantle and Sydney container terminals and a 96-hour stoppage at Melbourne during early July 2019.

The industrial action was sanctioned to combat a range of issues, which included “automation, outsourcing, cuts to income protection insurance and dishonest bargaining.”

The final grievance listed relates to accusations that DP World is trying to amend provisions in existing agreements.

In addition, the members of the unionised workforce have imposed an indefinite work ban, which will impact overtime and shift extensions. At the time of writing, DP World was challenging

the rights of the Maritime Union of Australia to use bans in the Fair Work Commission.

The introduction of confirmed industrial action followed the expiration of a three-month “cease-fire” deal between DP World and members of the MUA, with the union stating that DP World has continued to undertake job cuts and working conditions, with income protection for workers a remaining target going forward.

The Freight & Trade Alliance (FTA), the Australian Peak Shippers Association (APSA) and Container Transport Alliance of Australia (CTAA) have all appealed to shipping lines to waive any container detention and associated charges by extending free time as a result of the strike action. These

organisations added that the position is “not business as usual” DP World Australia (DPWA) issued a statement and admitted that the industrial action will cause “significant disruption to customers and, importantly, the broader supply chain of shippers, exporters and importers.”

The stevedoring company added that it is facing a challenging financial outlook, caused by consolidation and changes to shipping line alliances calling to Australia’s container terminals, before confirming that it had put forward its position and that the unions must “make appropriate concessions.”

At the time of writing, on the first day of the stoppage, there appears to no quick solution on the table.

For the latest news and analysis go to www.portstrategy.com/news

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THE STRATEGY

BRIEFS Bourgas concession extended The concession held by BMF Port Bourgas is being extended by another 11 years.

The company has operated a concession at Bourgas East-2 since 2012 and at Bourgas West Terminal since 2013.

In the period since these concessions commenced, the operator has confirmed that it has almost reached the investment requirements stated in the original 35-year operating concession As a result of the investment program, Bourgas East-2″, the terminal has secured a role as the main logistics base to support international projects related to gas, drilling, exploration and extraction activities of potential and active oil and oil fields in the Black and Caspian Sea. The modernisation and investment has also had a positive impact on cargo volumes handled too. The port has confirmed that the 2012 total of processed goods was almost 1.54 million tonnes, but by the end of 2018 this figure had risen to over 5.81 million tonnes. The new concession extension from the Government will see the operator invest further in port infrastructure and undertake new concession payments.

Durban congestion brings extra loaders Ongoing and extreme congestion at the Port of Durban in South Africa is forcing shipping lines to deploy extra loaders to meet their commitments. MSC has confirmed that cargo from Durban to Europe will be loaded on to existing schedules but no call would then be made at Cape Town to allow for lost time to be made up. This means that connections from Cape Town to Europe will have to be undertaken by dedicated extra ships of around 6,000 TEU.

10 | JULY/AUGUST 2019

BUENOS AIRES CONTROVERSIAL CONCESSION COCKTAIL

The formal launch of the Buenos Aires port tender for a single company to develop and operate one large container terminal facility is underway but not without controversy dogging its footsteps. The governmentbacked plan foresees the creation of a single container terminal facility with an initial capacity of 1.4 million TEU per annum rising to 2.7 million TEU by 2030.

The new terminal will feature an initial quay length of 900m of quay with this increasing, under a phase two development, to 1200m. The terminal area will cover 45 hectares.

This process will follow the closure of the three existing container terminal concessions in Buenos Aires, Puerto Nuevo, which are set to expire in May next year – DP World’s Rio de la Plata (TRP) terminal, Hutchison’s BACTSSA facility and APM Terminals’ Terminal 4. All three existing operators are strong candidate bidders for the new facility.

The idea of a single large facility – three into one effectively plus new capacity which can rise to nearly more than double the existing combined capacity of 1.4 million TEU per annum - is, on paper at least, potentially an attractive one with the incoming developer/operator having the prospect of being able to command a large market share.

The only remaining competition will be the Exolgan terminal in Dock Sud and the La Plata terminal of

ICTSI located approximately 60km south of Buenos Aires.

The investment equation is, however, not a straightforward one.

There are significant questions to work through, especially regarding the ability of the proposed new facility to accept direct calls over the concession period of 50-years. The port of Buenos Aires is located upstream in the River Plate (Rio de la Plata) estuary and is accessed by a 239km-long channel which is subject to tolls and has draught and width constraints notably in the final kilometres where Canal Norte leads to Porto Nuevo and Canal Sur connects to Dock Sud. The width of these latter channels falls in the 60 – 80m range and draught is just 9.75m.

Vessel sizes deployed along the South American East Coast have risen sharply following the opening of the enlarged Panama Canal and with vessel cascading from the main East-West arterial trades. This trend is expected to continue, with average ship size forecasts to grow substantially from 7 700 TEU in 2016 to 12,100 TEU in 2025 – and of course with maximum vessel sizes rising all the time. There are plans to deepen the channel access to Buenos Aires but it is already acknowledged that these will not cater for the largest vessels introduced into East Coast South America container trades. This suggests a progressive shift toward feeder port status for Buenos Aires over the lifetime of the concession, a lower revenue earning proposition.

8 Buenos Aires: Seeking a single operator

This trend could be further accelerated by other ports called in the region presenting draught restrictions – pushing lines towards a hub and spoke strategy built on feedering. Nearby Santos, with deep draught access, is a hub candidate.

The toll charges likely to be levied on larger vessels and the disincentive they represent to deploying larger vessels where possible are also a factor. There is a Net Registered Tonnage (NRT) element in the toll calculations, so with larger vessels does this mean higher costs passed on to importers and importers?

Cargo owners have additionally voiced concerns over the concentration of container handling power that the new terminal offers and the associated likelihood of rising costs. The way out of this is regulation in the context of the concession agreement but this is another potential area of challenge for terminal operators seeking to secure a healthy return on investment.

Yet another potential issue is automation. Government recently imposed a 40% pay raise for stevedores on terminal operators following strike actions. It seems inevitable that, at least in part, the successful bidder will introduce automation into the terminal handling systems.

What will the union reaction to such a proposal be?

For the latest news and analysis go to www.portstrategy.com/news

THE STRATEGY

APM MEDPORT TANGIER OPENS

INDIAN OCEAN PORTS – TREAD THE SAME PATH 8 APMT Tangier Med now in the start-up phase

APM Terminals’ USD800m MedPort Tangier transshipment terminal in Morocco has opened with an annual capacity of 5m teus and will support Tanger Med Port to increase its annual throughput capacity to 9m teus.

Part of the Tanger Med Port complex, the new transshipment terminal has been designed and constructed by APM Terminals and will also be operated by the company. It took two years to build and is APM Terminals’ second terminal in Morocco.

Morten H. Engelstoft, chief executive officer of APM Terminals, commented: “APM Terminals has a long-term relationship with Morocco and we are proud to be operating the second container terminal in the Tanger Med Port complex. APM Terminals MedPort Tangier is a key junction in our global network allowing us to serve our customers better and further facilitate global trade.”

With a quay length of 1,200m and a draft of 16-18m, MedPort Tangier can facilitate the largest vessels. Morocco has seen GDP growth of 4.1% and has a positive outlook for containerised imports and exports with significant growth expected in the years to come.

Approximately 200 cargo vessels pass through the Strait of Gibraltar daily, with major liner services linking Asia, Europe, the Americas and Africa.

Two leading Indian Ocean ports – Toamasina in Madagascar and Port Victoria in the Seychelles are progressing major expansion plans. Both need additional capacity to cope with new trade volumes and to promote greater levels of efficiency overall.

Toamasina project is the larger investment with this involving a USD639 million loan package from the Japanese International Cooperation Agency (JICA). This will be realised via two so-called Packages. Package I involves essential preparatory works, that are already well underway, with

Package II due to commence in 2020. When all works are complete they will have generated the extension of the existing breakwater by 345m, construction of a new container berth and dredging alongside the existing berths as well as new container storage areas and the deepening of bulk cargo berths. Extensive new equipment will also be introduced.

Port Victoria, Mahe, Seychelles is now implementing the detailed design works to realise a 600metre quay with a deep draught alongside and associated channel

dredging and turning circle improvements. Landside arrangements will also be reconfigured with new yard areas for the multi-purpose cargo terminal, improved separation of port activities (e.g. cargo handling, cruise and fishing activities) as well the introduction of modern cargo handling systems. Detailed design works are expected to run throughout the current year.

The European Investment Bank (EIB) is a key financier of these expansion works.

Abu Dhabi added to 2m service

New York/New Jersey launches masterplan

Hapag-Lloyd calls time on Tripoli

ICL Drops Liverpool for Southampton in UK

The 2M Alliance of Maersk Lien and MSC are offering an improved Asia-Mid East-North Europe coverage on the jointly operated AE7/Condor service. Abu Dhabi has been added as a new eastbound port of call, with the facility utilised ahead of Jebel Al in the rotation. Nansha is now being called westbound. Transit times are not going to be impacted, with Abu Dhabi now the likely key hub port.

The Port Authority of New York/New Jersey has launched its new 30-year masterplan that lays the foundations for future growth and development of the port.

The “Master Plan 2050” document follows a previous Master Plan 2030 process that eventually saw the Bayonne Bridge raised, port channels deepened to 50 feet, container terminals expanded, roadway capacity increased and the ship-to-rail network completed.

Hapag-Lloyd has stopped accepting all container cargo moving to and from Tripoli, Lebanon, with immediate effect.

The operator has commented that limited volume inducement has been an issue in the country for some time. As a result, scheduled calls were not being offered, but instead only sporadic vessels calls were being offered.

Now, weak demand and long dwells make it unsustainable.

Specialist niche transatlantic carrier Independent Container Line (ICL) is moving its UK call from Liverpool to Southampton to improve schedule reliability. The US-headquartered, privately-owned shipping line had been serving Liverpool for the past 20 years, calling at the Mersey port along with Antwerp in a two-port North European hub strategy.

ICL has confirmed that deteriorating weather conditions influenced the decision.

For the latest news and analysis go to www.portstrategy.com/news

BRIEFS

JULY/AUGUST 2019 | 11

Experience the progress.

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THEECONOMIST COLUMNIST BEN HACKETT

THE GOOD, THE BAD AND THE UGLY The global economy is in a flux, not knowing what indicators to believe and trying to gauge the coming of a recession.

I know that I have previously complained about the travails of being an economist these days.

Trying to forecast anything has become a challenge as the normal economic indicators have taken a back seat to tweets.

Take cargo demand flows, for example. We used to rely on output, production and inventory data for the short-to-medium term projections. Today, we first check the headlines to see what President Trump has tweeted regarding tariffs, Iranians and interest rates just to name a few topics. What should have been a good year for trade has been negated by these tweets so that stock markets crash, inventories are built-up in expectations of tariffs and stock market volatility is really ugly Economic data is sending us conflicting messages, suggesting a strong U.S. economy with poor indicators from the manufacturing sector supported by negative

trends inn China where production slowed to a 17-year low. Factory output is at the lowest level since 2002. Remember that the Great Recession was in 2008-09. A weak Chinese economy signals that the rest of the world that buys its

THESTRATEGIST

8 Conflicting messages emerging from economic data

exports is not altogether healthy.

It is clear that strategic policy positions are currently being driven by the use of trade as a tool of warfare in the economic forum.

This creates uncertainty for industry and for investment. Huge amounts of money is being spent on “The Wall” which would be better applied to improving the decaying infrastructure.

It is also evident that ports cannot escape the repercussions of weakening trade. As carriers remain in an uncertain financial environment, they will increasingly pressure ports and terminals to provide further discounts on their charges, thereby increasing financial pressures on a once highly profitable sector of the maritime industry. The industry does not help itself by developing increasing port capacity, particularly in Asia and South America. There is too much state backing (read China) and cheap money out of Asia to fund the growth of new terminals.

What is also worrying is that the bulls and the bears are running wild on the global stock markets trying to predict an impending recession. This creates further uncertainty as money flows into cash rather than into investment support for industry.

COLUMNIST

MIKE MUNDY

TAKE THE HIGHWAY TO PROFITABILITY There is a new container sector study about to hit the streets, Container Terminals: Paths to Profitability. It is authored by two well-known industry figures, Andrew Penfold former owner of Ocean Shipping Consultants and Remco Stenvert, a member of the senior management team of ECT Rotterdam, part of the Hutchison Group. For the sake of good form, I also have to declare an interest in being involved in an editing role in the study’s publication.

There are two main inter-related areas of the study – the analysis of the new norm of container trade development and the charting of largely empirical approaches to investing in and achieving, sustaining and growing container terminal profitability, covering both existing and new assets.

As the introduction to the Study puts it: “The risks and uncertainties facing the container terminal sector are considered, with these varying from macro-economic risks and the changing structure of box trade to the uncertainties stemming from development of the container shipping industry with its strained financial viability and its search for scale economies.

These external and internal factors,” the authors suggest, “make investing and developing in the container sector highly risky and underline the need for in-depth project evaluation.”

The client base of old is not the client base of today in the liner sector – the sector has seen far reaching consolidation and the rise of the mega-alliances.

For the latest news and analysis go to www.portstrategy.com/news

These trend lines, it is contended, pose significant challenges for terminal operators in terms of seeking to achieve and maintain acceptable margins.

The cocktail of these new macro and micro forces – including the requirement for an increased focus on productivity, automation and the environment – is effectively driving an era of change. This, in turn, promulgates the need to for more effective, targeted marketing and the application of new generation strategies for optimum pricing and profitability, adjusted according to the category of terminal: common-user; liner-owned, terminal and liner operator joint venture, etc. The study articulates these and provides case study examples. Complementing this

focus, the pros and cons of different terminal ownership models are assessed and the benefits that can flow from a full understanding of a client’s overall transportation cost chain. Generally, all the main factors are identified and appraised that influence the basic choices a terminal has to make and consistently pursue to build a sustainable competitive market position.

The study effectively charts the fundamental changes underway in the container terminal sector and plots a path, under different scenarios, of how to ‘stay ahead of the game’ in a much more demanding business environment.

8 For further information: info@mplimited.net

JULY/AUGUST 2019 | 13

THENEWYORKER

COLUMNIST

BARRY PARKER

ECOSYSTEMS AND WEDDING VENUES Ports are part of “ecosystems”, a new way of saying “big picture”and it's painful and frustrating when planners completely miss this important point. A local example of non-planning worth calling out is one where the pain is felt through personal touch points - I am talking about the efforts to transport passengers by ferry into New York's central business district from where I live, on the waterfront in a town about an hour outside of “midtown”.

In their infinite wisdom, in a true example of “build it and they will come”, the local municipality spent upwards of $7 million on a Ferry Terminal. After further backsliding, there are no responses to numerous Requests for Proposals (RFPs) from possible ferry operators. As ferry operators throw up their hands in frustration (the economics just don't work if one takes a conventional approach), the local municipality hires a consultant.

The new guy's considered suggestion is that a ferry serving my area could haul passengers to the Bronx (yes, an “outer Borough”)

where they would transfer to boats managed by an operator hired by New York City's Economic Development Corporation, or EDC, all while paying an exorbitant fare.

The passengers would then take another boat, downtown to the business area (where the ferry landings are not adjacent to many office buildings - but that's another problem for another article).

THEANALYST

8 Are planners thinking outside their silos in NY/NJ?”

A different agency, the Port Authority of New York and New Jersey (PANYNJ- well known to Port Strategy readers), is re-doing LaGuardia Airport (LGA), directly on the ferry route between downtown and my town. Early on, there was talk of a ferry link to LGA, but that was quickly thrown under the bus.

So, while all these agencies are not talking to each other, look at a map and imagine how my local area's waterfront could be a staging area for all those airport ferries (offering transportation, sans transfers, at little incremental cost since air travelers would pay full fare) The planners, all within 30 miles of each other, evidently, have no such imagination. If all of this were not true, it would be an amusing maritime satire. But, sadly, this is a true tale of planners who simply do not think outside of their silos. Of course, the situation with passengers (though it would apply to cargo) is more nuanced than I describe it, but the bottom line, top line, whatever...it's a failure of not looking at the bigger picture, or in the 2019 parlance, the ecosystem.

Meantime, I expect that the local guys will soon be looking at re-purposing the Ferry Terminal as a wedding venue, with waterfront views and all - its highest and best use. I just hope that potential caterers respond to the RFPs, unlike the ferry operators.

COLUMNIST

PETER DE LANGEN

PORTS AND LINES ARE IN NEED OF A ‘POSITIVE STORY’ The societal impact of cruise vessels is increasingly under scrutiny, focused on the effects of cruise passengers on cruise cities and environmental effects of cruise ships. The report on emissions by Transport & Environment is a case in point. This report is one more signal of an underlying trend of an increasingly critical stance towards cruise that threatens its ‘license to operate and grow’. So far, at least in my perspective, both the cruise ports and cruise lines have not developed a ‘positive narrative’.

The cruise liner association (CLIA) questions report's science and is disappointed Transport & Environment have not reached out.

MedCruise, the Association of the Mediterranean Cruise Ports, also challenged the T&E findings, while

14 | JULY/AUGUST 2019

Cruise Europe (CE), an association of over 140 member ports in Northern & Atlantic Europe, reportedly said of T&E: 'it represents mostly environmental groups which have targeted the cruise industry for a long time.' In addition they argued ‘Cruise represents less than 1% of all shipping and only 2% of the total leisure industry’.

These reactions come across as defensive. While the quality of the analysis clearly matters, the story is at least equally relevant in societal debates. Ports and cruise lines are in need of a positive story, and initiatives and investments to back it up. In my view it is indispensable to start with acknowledging that much needs to be done – and fast.

Once that is established, there is a case for positioning cruise as

pioneer and the cleanest of all shipping segments. In addition, it would be wise to emphasize the cruise industry’s ability to boost tourism in destinations that traditionally do not receive large numbers of tourists and actively work to include such destinations in cruise schedules.

In my view such an approach is the best way to secure the viability of cruise tourism. The comparison with the European fossil energy sector may be relevant: many fossil energy firms ignored the call for change, often with factual

arguments (fossil energy is needed when the sun is not shining, our new coal fired power plant is much more sustainable than importing energy from other countries) that may have been reasonable but lacked a compelling story. This has had consequences; firms were perceived as defensive, unwilling to embrace change and regulations followed. Many mostly fossil energy firms are now worth less than one fourth of their peak in 2008. Perhaps the comparison helps in encouraging cruise ports and cruise lines to develop a positive story.

Ports and cruise lines are in need of a positive story, and initiatives and investments to back it up. In my view it is indispensable to start with acknowledging that much needs to be done – and fast For the latest news and analysis go to www.portstrategy.com/news

THEENVIRONMENTALIST COLUMNIST CHARLES HAINE

While the media steers us towards the soap opera of turmoil in governing and geopolitics, in the UK at least, some positive initiatives are flowing into the marine space.

This is part of the organised push, under Nusrat Ghani, MP and maritime minister, to emerge from the peloton and bridge the gap to the leading countries now performing as the leading maritime and trade players.

The Clean Maritime Council has been devising a strategy to reduce GHG emissions from the sector and improve air quality in ports, on waterways and shipping lanes. The degradation of air quality alongside the officiallyacknowledged climate emergency are key battles of this age. Our sector is on catch-up.

The Government wants to act on shipping but this is subject to loosening the shackles that many governors face when trying to navigate change in the supply chain – mysterious ownership structures, flags of convenience etc. Success will be determined by tangible support and incentivisation of businesses to sell cleaner and greener tech. The use of hybrid ferries in The Channel, Isle of Wight and Thames is commendable but currently only small-scale.

Likewise, shoreside power (i.e. electrification/cold-ironing) is in place in Portsmouth and Scotland but the application is usually military and not yet economical for cargo vessels. There are some serious mountains to climb to make widespread tech and sector transition to the low carbon economy a reality. Yet, it will be required. Theresa May has forced through a legally-binding carbon zero target by 2050.

The environment is one of the main features of the Maritime 2050 Strategy, which is a long-term look at the opportunities for the sector, including the much talked about zero emissions’ shipping. There will also be a Clean Maritime Plan (July) and a Greening Finance for Maritime initiative launched at London International Shipping Week in September.

The financial sector is being increasingly vocal on these topics.

NEW ERA OF FINANCING IN THE MARITIME SECTOR

On 2 June, the UK Government’s Green Finance Strategy was launched as was the Green Finance Institute. There are some seriously ambitious intentions in the Strategy which will directly shape so many commercial sectors as they aim to shift £3 trillion into the green economy. If you’re a listed company or large asset owner you’ll need to disclose on your climate risks and governance in line with Michael Bloomberg’s vanguard initiative – the TCFD recommendations – by 2022. That’s not far away so why not start now? Non-listed companies may need to follow suit soon after.

Amongst the heat of the Saharan Bubble, June also saw 11 major banks launch the Poseidon Principles. Prepared with the input of ship owners, charterers, classification societies and academics, these aim to support the shipping industry by helping achieve the IMO’s stated target of cutting carbon emissions by 50%

For the latest news and analysis go to www.portstrategy.com/news

by mid-Century. The banks combined global shipping loan portfolio is worth $100 billion.

That’s about 20% of the market.

More banks are sure to join. The Principles establish a way to assess and disclose whether lending portfolios are in line with climate goals. Banks will apply them in all credit products secured by ships that fall under the reach of the IMO. Their goal is to promote responsible environmental stewardship and sociallyresponsible behaviours throughout the value chain. So, financial institutions seem to be the ones pushing companies towards

8 Shipping sector needs to stay true to Poseidon

emission savings pathways aligned with the Paris Agreement.

The Principles and the shipping sector as a whole is going to need to stay true to Poseidon: the protector of seafarers and the god of the seas, earthquakes and horses.

In his name, the sector needs to make an Olympian effort to help the international shipping industry cut emissions in at least half (of 2008 levels) over the next 30 years.

8 Charles Haine is technical director of maritime, sustainability and climate change at WSP.

The environment is one of the main features of the Maritime 2050 Strategy, which is a long-term look at the opportunities for the sector, including the much talked about zero emissions’ shipping. There will also be a Clean Maritime Plan (July) and a Greening Finance for Maritime initiative launched at London International Shipping Week in September JULY/AUGUST 2019 | 17

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BLACK AND CASPIAN SEAS

INFRASTRUCTURE INVESTMENT ONGOING IN BLACK SEA There are many container ports in the Black Sea region and while few attract larger vessels, infrastructure investment is continuing to compete for volumes, writes Alex Hughes

8 Economics and politics are driving port investment in Black Sea region

Investment in infrastructure continues, or is planned, throughout the Black Sea region, driven by a combination of demand but also political will. However, it is not just for containers that facilities are expanding, with grain also being catered for moving forward.

There are many container ports in the Black Sea region and while few attract larger vessels, infrastructure investment is continuing to compete for volumes, writes Alex Hughes.

Istanbul is the major container port serving the Black Sea, handling 60% of all volumes, says Nishal Sooredoo, analyst at Ocean Shipping Consultants. Constanta (a 12% share) and Novorossiysk (with 8% share) are the two other main ones, with Poti, Odessa and Varna each making smaller contributions.

“Ports such as Novorossiysk, Odessa and Varna have built their businesses to serve local markets. For this type of traffic, each port has a direct competitive advantage, since serving these markets from a foreign port would involve additional administration for border crossing and less efficient inland connections to the end destinations,” he says.

Nevertheless, other ports, such as Poti, have also partly developed demand on the back of transit cargo (mainly to Azerbaijan).

“This is also the case for Constanta, which acts as the point of entry for transit cargo by barge on the Danube River to Central European countries,” adds Mr Sooredoo.

Nevertheless, Istanbul remains the main transshipment port for the Black Sea region. This is largely because of the physical limitation of the Bosphorus Strait, which doesn't allow the transit of ships larger than 10,000 TEU. As a result, Istanbul has developed into a transshipment point for large vessels coming from Asia and North Europe, with 2,000TEU feeders then serving ports inside the Black Sea.

For the latest news and analysis go to www.portstrategy.com/news

Transshipment, however, remains volatile and highly price sensitive, driven by port tariffs.

“Shipping lines often move volumes from one terminal or port to another, but these volumes do remain in the same region. So, for the Black Sea region, for example, while transshipment volumes could move between Constanta, Istanbul and Piraeus, they do nevertheless remain in the (East Med) region,” says Mr Sooredoo.

There is lot of investment in the Black Sea region, such as the development of Anaklia and Poti in Georgia, as well as expansion plans in both the Ukraine and Bulgaria. Some of this development is to provide much needed additional capacity, but Georgia is a good example of a project driven by politics rather than economics.

“There is a need for additional capacity in the country, but if Anaklia is built, the new development for Poti would not be required. If Poti is expanded, there is no need for Anaklia.

Currently, both development are being pushed but only one is really required,” he says, noting that there are already private operators in all ports and there are not a lot of opportunities left for private investment left in this region (unless a new port like Anaklia is built).

“The overall dynamic in the Black Sea region will not change significantly because all ports are now mainly focusing on their captive market,” says Mr Sooredoo.

Although vessel sizes cannot exceed 10,000TEU, there is already one service from Asia with ships of that size that makes weekly calls at Istanbul, Constanta and Odessa.

Ports on the Eastern side (i.e. Georgian ports) have draft restrictions and can not take vessels of more than about 3,000 TEU. For this reason, the Georgian government wants to build a new port at Anaklia.

JULY/AUGUST 2019 | 19

BLACK AND CASPIAN SEAS

However, what remains is that it is the size of the local market that determines the size of ships that come to ports.

Another factor impacting the container business in the Black Sea has been the war in eastern Ukraine, which started in March 2014. Odessa was initially badly affected, seeing volumes drop by 26% between 2013 and 2015. Yet by 2017 these had recovered to pre-war levels and grew strongly by 15% in 2018, thanks in part to the fragile cease fire holding.

Inland connections from ports in Bulgaria and Romania are generally good. Constanta, for example, benefits from access to the Danube River, with barge connections to the rest of Europe and this has clearly helped it to develop. In Georgia, connections are being upgraded to help with capturing more transit traffic to Azerbaijan and beyond.

However, Mr Sooredoo notes that there are no real alternatives to using Russian ports for Russian cargo, so this has not really impeded their development.

“In the case of Ukraine, the war has made it very difficult and dangerous to serve landlocked regions like Belarus and Moldova via Ukrainian ports. The large drop in volumes in 2014 and 2015 was partly attributed to these transit markets and this situation remains the case now,” he says.

In August 2019, a radical shake up of the Black Sea container handling market is due to take place. This will be the result of the inauguration of NUTEP's new deep water Berth 38, which will be able to receive 10,000TEU vessels at its Novorossiysk terminal.

The new 389-metre long berth, which will eventually absorb investment of around $125 million, has water depth alongside of 15 metres. In the short term, the largest vessels expected to berth there will be of 8,000TEU, later increasing to 10,000TEU. This is a significant addition, since it is the first such deep water berth available at any of Russia's southern ports. The berth area itself covers an area of 4ha and can store up to 3,080TEU in the yard.

NUTEP Container Terminal, which is part of DeloPorts - the stevedoring arm of the Delo Group - is also investing in associated storage facilities, totalling $10.76 million. This will add an extra 150,000TEU per annum of storage capacity, although the full berth development will eventually double that, allowing NUTEP to handle somewhere in the region of 700,000TEU per annum.

“The development of the terminal is being synchronised with the growth in cargo, so the second part of the development programme may take several years to implement,” notes Chief Executive Officer of NUTEP Container Terminal Yury Matvienko.

In terms of equipment, in April 2019 ZPMC delivered three ship-to-shore gantry cranes and a further four RTGs. In addition to containers, DeloPorts is also a major grain handler. Indeed, its KSK grain terminal handled 4.8 million tonnes in 2018, volumes rising by 14% compared to 2017. The company candidly attributes rise this to a good harvest and strong demand. As with all agribulk traffic, future predictions are hard to make, given so many factors influence demand. Nevertheless, the company is working on expanding its grain throughput capacity at the KSK terminal to 6 million tonnes by 2021.

“Existing terminal capacity at the port is sufficient to absorb current annual increases in traffic across both grain and containers. Furthermore, after the launch of berth 38 at NUTEP, our terminal storage capacity will increase two-fold, depending on how we see traffic evolving,” says Mr Matvienko.

According to Mr Matvienko, on a geographic basis NUTEP has the most cost effective connections to both highways and railways at the Port of Novorossiysk. Railway operations are undertaken at a dedicated six-track fan, where a locomotive is permanently stationed to roster trains. As a result, the overall share of freight transported by rail transport through NUTEP is growing annually.

8 Size of local market determines size of ship

Nutep reports 36% box growth in 2018 In 2018 NUTEP posted a record total annual throughput of 333,000TEU, which included monthly records in both March (40,800TEU) and December (45,100TEU). Overall, containerised tonnage reached to 3.8 million tonnes, reflecting a 36% increase over 2017.

According to the company, it has a 44% share of containerised cargo traffic at Novorossiysk, equal to a 6.5% share of Russia and up to 43.2% when the Azov and Black Sea areas are viewed in isolation.

Noting that import-export container traffic grew by 9.6% in 2018 compared to 2017, with both laden import and export boxes up,

20 | JULY/AUGUST 2019

Mr Matvienko told PS that, “The increase was caused by organic growth in volume generated by our main customers, Maersk Line, Cosco, CMA-CGM, Hapag-Lloyd, and the ONE carriers. The good levels of growth included regular flows of imported refrigerated containers containing fruit and vegetables for consumption in the Russian Federation.”

Transshipment is not yet a regular feature of operations at Novorossiysk, although some one-off services of this kind do take place.

This could change when the new berth is fully operational.

While 2018 was mainly positive in terms of traffic, 2019 has seen some degree of retrenchment, with throughput in the year-todate slightly below the volume posted to date, one year ago.

“Macroeconomic factors have primarily affected the position. Based on the available signals from the market, we estimate that the situation will begin to change and the overall volume of box traffic at Novorossiysk is expected to increase by around 2% - 3% at NUTEP by year end. We estimate our total growth potential for 2019 to be somewhere in the region of 15% - 17%,” confirms Mr Matvienko.

For the latest news and analysis go to www.portstrategy.com/news

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PORT SURVEY: CONSTANTA

CONSTANTA NOW TARGETING HINTERLAND DEMAND When the Romanian Port of Constanta began to develop its container handling facilities, it had its eye on securing transshipment traffic, writes Alex Hughes Constanta previously handled higher volumes of transshipment container traffic, but is now targeting import-export demand to replace the lost business. With DP World extending its concession, the port is also seeing competitors beyond just its localised region.

The argument was that the Black Sea region lacked a dominant box hub, forcing many shipping lines to use feeder vessels from ports in the Eastern Mediterranean rather than direct liner services to ports that, in many cases, lacked sufficient draft.

Initially, Constanta appeared to prove this argument about being the region's natural hub to be correct, attracting significant calls from many of the deep sea lines. However, DP World Constanta was hit hard by the Global Financial Crisis in 2009, resulting in the terminal losing almost all its transshipment containers. Formerly, this activity accounted for a 75% share of overall demand, but is now down to less than 5%.

Nishal Sooredoo, analyst at Ocean Shipping Consultants, notes that DP World built up volumes very rapidly after it took over the terminal in 2003 but the global financial crisis and loss of transshipment traffic to other ports such as Piraeus and Istanbul occurred.

“This period also coincided with the emergence of ports in the Adriatic, such as Koper, Rijeka and Venice, which provided a new routing option to reach the Central European market, via rail,” he stated.

Cosmin Carstea, CEO DP World Constanta, responds by pointing out that, “The current focus, which is on import and export cargo, constitutes a healthy growth since it is based solely on the evolution of the Romanian national economy.”

In 2018, the port handled a total of 668,016TEU, compared to 696,438TEU in 2017, a decrease of 4%. This decrease does form part of a short term decline, with the present level of traffic very similar to what was moved by the port in 2014.

The vast majority of the containers in Constanta are handled by the DP World facility. Explaining the drop off in traffic, Mr Carstea notes that over the past two years government policy has been to reduce the export of wood origin products (timber, logs) and these are commodities which comprised the majority of export cargo at the port so impacted negatively on throughput.

“So far, 2019 has seen a slight improvement over the same period last year, mainly correlated with Romanian purchasing power. As such, any impact on the national economy will impact container throughput in Constanta,” he says, especially that, nowadays, 95-96% of total traffic is in the form of origin/ destination boxes.

The current capacity of the terminal is 1,000,000 TEU and there is sufficient land area for phased expansion to cater for volumes of over of 4,500,000 TEU. So, where is future growth to come from?

While hinterland connections beyond Constanta can be something of a challenge, DP World Constanta stresses that it offers importers and exporters in Central Europe speedier and more cost effective access to the Far East market than

22 | JULY/AUGUST 2019

movement via the traditional routing over North Continental ports, since it avoids congested intermodal bottlenecks in Western Europe.

To promote this routing, DP World is actively developing an intermodal network that expands from the port to assist shippers in the movement of their cargo. “In addition to that, and with the scope of being a trade enabler for our customers, we are on the constant look out to offer value added services, ranging from sharing our global expertise to working towards offering logistic services within the terminal,” says Mr Carstea.

There is little doubt that DP World is committed to this project for the long term. Its Constanta terminal recently signed a concession renewal agreement with the Constanta Port Authority for another 30 years of operations. In support of this arrangement, DP World is continuing to invest, either by expanding yard capacity or ordering additional container handling equipment and, in due course, bringing additional berths on line.

In terms of competition, Mr Carstea stresses that this does not necessarily come from other Black Sea Ports but rather the domestic nature of its current cargo profile means the North European Ports or Adriatic Ports (Rijecka, Koper, Trieste), or even Pireus, in Greece, are the main competitors.

Nevertheless, having once attracted large amounts of transshipment traffic, Constanta is well suited to handling larger ships. The draft varies between 14.5 metres and 16.5 metres, sufficient to handle vessels in the 10,000 TEU class, although currently there do not appear to be any known plans for the larger vessels to call at the container terminal.

8 Cosmin Carstea, CEO, DP World, Constanta

For the latest news and analysis go to www.portstrategy.com/news

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US WEST COAST

CHINA, IT AND REGULATIONS REMAIN FOCUS OF US WEST COAST PORTS West Coast pressures are making themselves felt across the port industry, at a time when US Congress treats maritime regulations like a Christmas tree, writes Martin Rushmere New York/New Jersey, which has remained behind Los Angeles and Long Beach as the country's third busiest container port for the past 27 years, will have overtaken Long Beach for loaded container traffic by the end of this year.

This has been predicted for some time by industry watchers, and is the clearest indicator yet that pressures building up on the West Coast are now taking their toll. A combination of the enlarged Panama Canal, ever-tightening environmental/ pollution rules, tariffs and trade wars, periodic congestion, higher costs of using the terminals and aggressive dockworker trade unions is causing the once unassailable walls of supremacy to crumble.

Shipping lines are also tired of holding their breath over clearly unachievable California regulations. Ballast water has been an example, with the state setting vessel discharge limits way beyond practical levels. Although the authorities have backed off, the industry knows that authorities will come up with other unrealistic regulations.

These issues, which are probably likely to continue indefinitely, have been shoved aside by the trade war with China. While there is definite evidence that this is bearing down on the West Coast, a much longer term trend puts the trade war in greater perspective.

According to the pacific Merchant Shipping Association: "The five major West Coast ports have seen their collective share of the China import trade entering U.S. mainland seaports diminish over the past fifteen years from 75.8% in 2003 to 59.4% last year." Exports are suffering to a much smaller extent, as China accounts for only 7 percent of the US total compared with 20 percent of imports.

Jitters over the trade war have had their predicted effect on an import surge at the two Southern California ports and that has led to congestion at distribution centres and warehouses.

Leasing rates for storage have risen sharply in Southern California and road haulage rates have also firmed sharply.

Yet in contrast to the traditional pattern of congestion, the bottlenecks have come when import volumes are falling at the two ports. This is a reflection of the uncertainty and confusion over both the extent and duration of the tariffs that the White House has imposed.

Some importers are stocking up as much as possible in the shortest time possible, while others are trying to mitigate the risks by going all out on the import accelerator and then easing back.

The uncertainty has also led to unexpected side effects. The Texas border town of Laredo in March outstripped Los Angeles as the busiest port of entry into the US with $20 billion in trade, which compared with $19.6 billion for LA. Thankfully for the supply chain, much heavier reliance on IT and automation means a more efficient handling system. At the two Southern California ports, turn times for container cargo vehicles at the automated terminals of Long Beach Container Terminal and TraPac were the best in April of all similar-sized terminals, at 32 and 51 minutes, respectively. The average for all terminals was about 80 minutes.

24 | JULY/AUGUST 2019

Greater IT involvement coupled with expansion projects has certainly brought dividends at California's third port, Oakland.

Average container vehicle transaction times were 62-to-72 minutes in May at marine terminals, down from a high of 92 minutes in January.

Maritime director John Driscoll attributes the improvement to the addition of gate night shifts to ease daytime terminal crowding, appointments for vehicles to pick up cargo and the completion of a 2-year, $67 million expansion at TraPac. “It's an encouraging sign for all of us,” says John Driscoll. “It indicates that we're operating more efficiently for the benefit of the global supply chain.”

Oakland has been much less affected by the trade war, partly because exports, mainly agricultural, almost match imports. Containerised exports rose more than 8 percent in May, mostly to Asia, over the same month in 2018.

“Logic tells us that at some point, tariffs should drive down cargo volumes because they're making international trade more expensive,” affirms John Driscoll. “But our customers have so far defied conventional wisdom by finding new markets for their products.”

Export growth centered on Vietnam, Taiwan, South Korea and Japan.

Mr. Driscoll has told the Port's Efficiency Task Force that tariffs are squeezing customers who ship through his port.

Fallout from an on-going U.S.-China trade war could include reductions in containerised cargo volume, he indicated.

“Our customers are impacted by tariffs,” the port executive said. “We're hoping we can get through this period because we believe the future can be bright.”

Seattle and Tacoma have now also realised the rewards to be gained from offering heavy vehicle operators more flexible gate hours. The Northwest Seaport Alliance has set aside $2 million to be paid to terminal operators for operating extended gate hours. A fee of $38 will be levied for each loaded export container being taken to a vessel, regardless of when the container arrives. "It takes the entire supply chain to make the Gate Efficiency Program successful as a long-term strategy in

8 Shipping lines are holding their breath over regulations in California

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US WEST COAST

keeping our gateway competitive,â&#x20AC;? confirmed Dustin Stoker, the alliance's chief operations officer.

Start date is July 1, going through to December 31, 2020.

In what is seen as an imaginative solution to a potentially serious problem for Seattle, an agreement has been reached to develop the dormant Terminal 5 to handle multiple 14,000TEU vessels and increase throughput significantly.

The impasse has been overcome by a combination of tenants changing leases at other terminals in return for a slice of the action at the terminal, which will cost $340 million - the biggest development since the Alliance was formed in 2015.

Credit rating agency Moody's calls the scheme a "credit positive". The agency rates both Seattle and Tacoma as A1-stable.

China's tariff retaliation has affected other West Coast ports.

Soybean exports to China from the Port of Longview are off by 65%. The port says delayed shipments because of bad weather are part of the reason, but the trade war is the main cause.

Wheat and corn remain strong and have strongly supported the port. Grain represents 25% of the Port of Longview's operating revenue, and wheat and corn remain strong commodities for export, officials said.

According to the biggest grain exporter in the Pacific Northwest, United Grain Corporation, the trade war will mean about 130 fewer shiploads of grain this year from the region.

Environmental issues are equally as important in the Pacific Northwest ports as in California. The Oregon Department of Environmental Quality has held up the Jordan Cove natural gas export project by withholding a water quality certificate.

The department says it is not convinced that the project "will comply with applicable Oregon water quality standards and because the available information shows that some standards are more likely than not to be violated."

The scheme was first mooted 15 years ago and has been through a number of lifecycles, with changes of investors, types of construction and capacity. Jordan Cove is being allowed to resubmit its application and resume negotiations with state authorities.

A different scenario is being played out in Washington, where the state is blocking the development of the Millennium Bulk Terminal coal export project in Longview.

Wyoming, where most of the coal is coming from, has passed a law allowing the state to hire a private lawyer to sue Washington. But this is not a case of whistling in the dark as the White House has issued an Executive Order scaling back the conditions on which state governments can block energyrelated developments.

The political philosophy is that energy is crucial for the US economy and efforts to limit it will affect the whole economy, coupled with hints that such actions are anti-American.

At the small Washington port of Everett, a legal tussle is being played out over property ownership. The port has declared it is taking over a disused site owned by Kimberley Clark (producers of face tissue products), while the owners say they have made an agreement to develop a fish processing centre.

The port wants to develop both private and commercial harbour facilities.

A new set of regulations on computer and internet security implementation enforcement is causing head-scratching among ports while proving an embarrassment to the Coast Guard, responsible for enforcement and implementation.

"Bizarre" is how a maritime analyst describes it. "The regulations were slipped into the Federal Aviation Administration Bill last year for no sensible reason. Whoever drafted them assumed that seaports are the same as airports and applied a one size-fits-all approach."

One cause of confusion and embarrassment is the section

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that stipulates that the Coast Guard, together with the government department overseeing "critical infrastructure protection, cyber security" and related issues must develop a "maritime cyber security risk assessment model" in conjunction with the National Maritime Security Advisory Committee, and subsidiary regional committees. (The law was passed in October 2018 and the Coast Guard has one year to comply.)

Bundled with other aspects of container and terminal security, the cyber security legislation comes under the Maritime Security Improvement Act of 2018.

The problem is that, following the fashion of the White House not bothering to fill government posts, the security committee no longer exists. Officially, it has "lapsed", meaning that terms of office have ended and no replacements have been appointed. What's more, it is unlikely that any replacements will be appointed, according to industry analysts.

Maritime officials criticise the law as being a confusing mix of general and vague requirements for more efficient methods and closer cooperation with the federal government. An example of this is a section that calls for "a plan for detecting, responding to, and recovering from cyber security risks that may cause transportation security incidents."

Adding to the confusion is the stipulation that the U.S. Coast Guard must draw up a plan on "security and response in the port environment when a cyber-caused transportation security incident occurs, to include the use of cyber protection teams."

Other regulations already refer to this and there is considerable uncertainty about the need for the U.S. Coast Guard to be involved.

Ports' official responses to the effect of the regulations are terse and non-committal. "The U.S. Coast Guard headquarters in Washington, D.C. is developing guidance on the cyber security portions of the FAA Reauthorization Act of 2018.

Port of LA staff meets regularly with the U.S. Coast Guard and we will be advised when the U.S. Coast Guard finalises its guidance on this matter.

A spokesperson for the U.S. Coast Guard says: "We are aware of section 1805 of the FAA Reauthorization Act of 2018, which clarifies and emphasizes the need to plan for cyber security risks at maritime facilities. The U.S. Coast Guard is responsible for implementing that provision. Paragraph (a) of section 1805 calls for the development of a maritime cyber security risk assessment model, which the U.S. Coast Guard is working on.

We are communicating with port partners and have not encountered any substantial confusion."

Why the regulations were slipped into an aviation law stems from familiar Congressional wrangling. Maritime officials say that the U.S. Coast Guard has been keen for some time to get more efficient coordination between itself, terminal operators, port authorities and the government on IT security. At the moment ports and terminal operators work independently and there has long been a need for more unity and purpose.

However, when the U.S. Coast Guard asked Congress to get busy, the response was that nothing could be done before 2020 and the only way to get immediate action was to be included in the FAA law.

"The maritime section became a Christmas tree for various lawmakers to hang their own ornaments on," says a maritime official, "without knowing what is needed." Others see the regulations as more confirmation that Congress has too much time on its hands and meddles in industries that it knows nothing about.

The U.S. Coast Guard and ports are paying lip service to the regulations, hoping they will just go away.

Says a maritime legal analyst: "The legislation is badly drafted and needs to be completely rewritten."

JULY/AUGUST 2019 | 25

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SECURITY

WHAT’S IN THE BOX? NOT NECESSARILY WHAT YOU THINK Thousands of containers moving around the globe are declared harmless when they actually hold dangerous cargoes. Felicity Landon looks at the implications

8 Mid-declaring cargo can be an art for many shippers

What’s the difference between calcium hypochlorite and ‘water purifying equipment’? Or between ammonium nitrate and ‘plant growth regulator’? Nothing, most likely. Misdeclaring dangerous cargoes appears to be something of an art for many shippers who are, it is assumed, anxious to avoid the paperwork, restrictions, regulations and/or costs involved in shipping extremely hazardous goods.

The results can be devastating, as evidenced in an alarming number of container ship fires – at sea and in port – that have been put down to mis-declared cargoes.

Shipping lines and other stakeholders are attempting to fight back. But while it would seem to be common sense to take collective action on an issue that threatens safety, lives and environmental damage, such an approach can be hampered by anti-trust and competition rules.

To put the issue into perspective, using its Cargo Patrol system, set up to scan bookings to detect undeclared dangerous or suspicious items, Hapag-Lloyd identified 370,000 suspicious bookings in 2018. “Of these, we investigated 290,000 in depth and at the end of the day we had 4,000 bookings where we have proof that the cargo was mis-declared, not declared or wrongly declared,” says Ken Rohlmann, the line’s senior director, dangerous goods.

That figure means far more than 4,000 containers, as one booking can be for multiple boxes. In the first quarter of 2019, Hapag-Lloyd’s investigations identified 900 such mis-declared bookings.

Cargo Patrol scans bookings for 7,000 key words and search terms that give reason for suspicion. “There are some chemicals or some chemical formulae or words where you could try to hide the real content of container – which could be acid or explosive.

Some people put the chemical formula and avoid the actual word for the cargo they are carrying,” says Nils Haupt, Hapag-Lloyd

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senior director, corporate communications. “This has been going on for quite a while. There are really thousands of containers that are mis-declared, either intentionally or by chance.”

Hapag-Lloyd estimates that 0.06% of containers worldwide are carrying undeclared dangerous goods. “If you just look at Singapore, that would amount to 18,000 containers a year,” says Mr Haupt.

What happens when the system finds a rogue box or boxes?

Mr Rohlmann says, “We don’t load them. If we get an alert from the system, we put the container on hold. We contact the customer and ask why they didn’t declare the cargo.”

But what happens next is hugely frustrating. The shipper can simply book the same ‘harmless’ container with the next shipping line.

“We do report undeclared shipments that we find to the CINS (Cargo Incident Notification System),” he says. “But unfortunately, we are not legally allowed to name and blame. We can only describe the cargo, port of loading and planned port of discharge. At that state we don’t necessarily have a container number and we are not allowed to name the problem shipper.”

This is down to multinational anti-trust restrictions, he explains: “But if we have proof that someone has cheated on us and is putting our people at risk and risking damage to the environment, we should be allowed to talk about this.”

Mistakes can be made, of course, but it’s the deliberate cases that really scare him. “They deliver manipulated documents and manipulated safety data.”

“This represents a risk for everyone dealing with the box – truckers, inspection officers, those securing cargo, with all assuming it is a harmless cargo when it is toxic. If you don’t know what is in the box, it is a potential risk. For example, if there was a fire on the terminal, there are some chemical commodities for which contact with water is dangerous.”

JULY/AUGUST 2019 | 27

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SECURITY

8 Structured industry cargo screening needed

He would like to see structured industry cargo screening where all the lines exchange key words and data on fraudulent shippers and are allowed to blacklist shippers that continuously make fraudulent bookings.

The TT Club has been working with ICHCA International, the Global Shippers’ Forum, World Shipping Council, CINS and others on a range of aspects around dangerous goods and declaration.

“Roughly two-thirds of cargo-related incidents relate to the poor packing process in its entirety, i.e. securing, load distribution and declaration,” says TT Club risk management director Peregrine Storrs-Fox. “We are seeing cargoes of a much wider range being put into containers and higher volumes of cargo being loaded on single ships, i.e. an adjacency risk. One package in one container can cause a hazard when it is next to a number of other containers, whether in the ship’s hold or awaiting/post shipment on the berth.”

There are often commonalities to be found, of shippers who habitually get packing processes wrong or declaring cargo incorrectly also being involved in customs fraud or other security-type issues, says Mr Storrs-Fox. A big issue is insufficient enforcement by cash-strapped governments. Enforcement is difficult to push up the agenda.

There is also a mismatch between transport modes: “Those involved in maritime enforcement may not have that much contact or leverage with those involved in road or rail enforcement. There are jurisdiction and communication and the legal frameworks are not in place.” But above all, he says, the anti-trust issues restrict lines’ ability to share information.

“Shipping lines have reason to be concerned that they could fall foul of commercial/anti-trust rules.”

Shipping line A may have words with a shipper and decide not to carry a cargo but that shipment is almost definitely still going to move, either with a competing carrier or even on one of line A’s own ships because the other carrier is in the same alliance.

As Mr Storrs-Fox points out, while a line gets as much information as it requires when dealing direct with a shipper, it receives only minimal information when dealing with an alliance partner’s cargo, to prevent it from pinching cargo.

Hence it can end up shipping the very container it rejected.

More than 130 people ended up in hospital after an explosion and fire onboard a containership in Laem Chabang port in May, thought to have been caused by mis-declared cargoes of calcium hypochlorite and chlorinated paraffin wax.

“This illustrates the risk that stevedores take these days. They are in a similar position to the partner line in that they will have limited information around each container coming into the terminal,” says Mr Storrs-Fox. “They will do what they can to put the container in the right part of the yard, connecting to power and/or monitoring if needed, but unless they are told this, they will deal with it as a normal box.

“We have seen explosions and fires related to the condition of the cargo at a number of terminals.”

From his own calculations, he believes there are more than 150,000 containers a year that represent ‘ticking time bombs’ in the supply chain. Could something like Cargo Patrol be made standard across the industry? The debate is fraught and full of complexity, he says. “A shipping line will have anti-trust lawyers sitting on their back saying they should not be talking about anything like this to their competitors.”

Tackling the danger Tackling the dangers of mis-declared cargoes requires more consistency in messaging and standards and a reduction in the amount of erroneous paperwork, says Peregrine Storrs-Fox. Confusion and inconsistency can be reasons for shippers deciding to mis-declare.

Each port around the world has its own restrictions for certain cargoes. Each line therefore has to check the restrictions to see whether they can carry a specific cargo (or amount of it) based on the intermediate port

calls on their route. The restrictions vary, there is a high propensity to error because it is a very manual process, and sometimes restrictions are open to challenge, says Mr Storrs-Fox. “Each time there is a restriction, whether at carrier or port level, there is an incentive to declare it as something else to get it through the system. I am not condoning bad behaviour but if someone wants to move cargo from A to Z, they need to find a way to do that. One way is to say that it is not quite as

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bad as it really is, in order to get around the process – as with calcium hypochlorite, which is used for water treatment and purification, but is highly volatile and dangerous.”

Ken Rohlmann agrees: “Where there are a lot of port regulations or shipping lines are not accepting a specific cargo, it will find its way.

My philosophy is that we try to have our ‘restricted’ list as short as possible and invite shippers to find the best way and the safest way to transport it. Saying ‘it isn’t allowed’ is going to increase the problem.”

JULY/AUGUST 2019 | 29

HEALTH & SAFETY

PORTS ARE TARGETING HIGHER STANDARDS FOR HEALTH & SAFETY Upgrades are not just the province of modern gadgets and technology. Improvements are taking place in all quarters to progress life at home and in the workplace. A recent example of this is the International Organisation for Standardisation (ISO). In March 2018, ISO 45001 was published for the first time, with the ultimate aim of reducing the level of occupational injuries and diseases. More than a year has passed since its debut, and with the 2021 deadline more than a year and a half away, higher numbers of ports are getting on board with the new standard's requirements.

“ISO 45001 is an international standard that aims to improve an organisation's occupational health and safety (OH&S) systems,” explains Stuart Balmer-Howieson, Port of Blyth's HR & Safety Manager. “There are a number of benefits to be gained by attaining the standard, including increased awareness of OH&S risks, employees taking a more active role in OH&S, and most importantly, a reduced risk of incidents.”

“In our competitive industry, it is important for us as an industry leader to continually strive for the highest of standards whilst staying at the forefront of best practice.”

Murray Newton, Corporate Relations Manager, Port of Melbourne, says that there are many opportunities afforded by the ISO 45001 standard. From a safety point of view, Mr Newton explains in detail that the number of risks and injuries are lowered while safety levels rise: “ISO 45001 provides an opportunity for ports to develop safer work systems and procedures, particularly for high-risk work environments. As well as this, it means that ports can develop KRAs to improve OH&S outcomes and reduce the number and severity of injuries through root cause analyses and a commitment to continual improvement. Improved hazard and risk identification and subsequent mitigation / control measures result in lower risks.”

Mr Newton adds that other benefits arising from ISO 45001 include an increased visibility in contractor management and a greater understanding of issues and expectations to improve outcomes for customers, port users and other stakeholders beyond the port gate. “Furthermore, it enables ports to develop consistent processes and improve stakeholder engagement,” he confirms.

Ports around the world have been working hard to attain the accreditation. To achieve a successful outcome, detailed assessments have been carried out, with favourable results at locations such as the Port of Blyth. “It was a proud moment when we were assessed and certified with the ISO 45001:2018 accreditation for all of our operations here at Port of Blyth,” says Stuart Balmer-Howieson. “The accreditation is a true reflection of our entire workforce commitment to excellence. It is them that make us who we are today. However, another important factor that contributes to our success and helps us to showcase our standards, is not only gaining the latest accreditations in our industry but also being the first UK port to do.”

Not only does the standard improve the Port of Blyth's overall health and safety initiative as a business, it will also allow the Port to continue to tender and be considered for projects from the oil, gas and renewable energy sector. “Many

30 | JULY/AUGUST 2019

Credit: Port of Melbourne

John Bensalhia investigates the implications, benefits and challenges connected with the ISO 45001 health and safety standard for ports and understands why ports regard the process as a beneficial one

businesses often require standards such as ISO 45001 to be in place from a service provider such as ourselves and this next step allows us to stay at the forefront of the safety in the port industry,” says Mr Balmer-Howieson. “It is important for us that our clients can always be confident in our commitment to safety and gaining this latest accreditation is one way of showcasing our dedication to this area.”

A positive result has also been achieved for Forth Ports. All eight Forth Ports' operations in the UK gained the ISO 45001 accreditation, including Tilbury on the River Thames and the Scottish ports of Grangemouth, Leith, Rosyth and Dundee.

During a two-week period, the detailed audit of the group included interviews with employees, inspection of quaysides and office-based reviews of administration. Stuart Wallace, Chief Operating Officer for Forth Ports commented that Health & Safety is a key priority for Forth Ports, with the standard providing both employees and customers with the “reassurance” that “robust processes” are implemented at the eight locations.

8 Port of Melbourne port and tower

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HEALTH & SAFETY

The first international terminal operator in the Philippines to garner the ISO 45001 standard, Asian Terminals Inc. (ATI), has always put safety at the top of the priority list, with a number of notable innovations and initiatives, such as a fall arrest system, solar-powered twist-lock pinning stations, edge protector prototypes and general cargo handling procedures. ATI executive vice president, William Khoury, explained that as a responsible port organisation, ATI's commitment to implementing “the highest standards on health, safety, quality, security and environment” are collectively contributing to “safer, better and more efficient port services for the Philippine supply chain.”

While achieving ISO 45001 brings positive developments for ports, attaining the standard can bring its own challenges.

Murray Newton says that the challenge is two-fold, looking at the issues posed from both implementation and operational angles. “In terms of implementation of ISO 45001, the cultural change required may be significant depending on the maturity level of the organisation. A significant change management program may be required.”

Mr Newton adds that a critically important aspect of the process is strong leadership, requiring a commitment to change and continual improvement. The right approach to

Beyond The Classroom Educating ports about the ISO 45001 standard means it is essential to keep up with developments in this field. The usual classroom methods are now augmented by online learning - an ideal tool for port managers and employees who may be too busy to attend courses in person.

In addition to its range of classroom training courses, the BSI Group also offers a broad spectrum of online courses relating to this sector. Classes are available for migrating from the old BS OH SAS 18001 to

the new ISO 45001 and how to implement the new standard at an existing business.

As well as these options, online courses tackle managing safety refreshers, managing safety for non-UK students, the new standard of safe working, and its management.

Another example of this method can be found at Lloyd's Register, which has introduced five new eLearning courses (with more to come later in the year). This offers greater flexibility for port teams.

Learning can take place anywhere, anytime from lunch breaks in the canteen to the port offices. All that is needed is a laptop (or even iPhone), a good Internet connection and a mind willing to absorb knowledge about the new standard.

In fact, the launch of Lloyd's Register's new training platform means that online courses can be accessed on any device. Those with an Apple device, for example, can take advantage of a special app that allows course content to be directly downloaded.

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JULY/AUGUST 2019 | 31

implementing the standard is also vital for ports, which he confirms as meaning “it should be viewed as a sustainable business methodology rather than a certification project.”

The other side of the challenge - operational - presents its own issues for ports. Murray Newton says that such challenges include “High risk operations such as cargo handling, working at heights, near water and confined spaces, line-handling and interactions between plant and people.”

Management of aspects including dangerous goods, the presence of on-site multiple contractors and competing priorities of compliance and commercial imperatives can also prove to be an obstacle for ports. “As well as these, other operational challenges include rail and road interactions and the balancing of port operations with local community needs/expectations, notably noise, light and air pollution.”

With respect to the level of time and money required to invest in ISO 45001, Mr Newton says that this will be dependent on a number of factors, stating that it "depends on the maturity level of existing business processes, the culture of the business and commitment of the leadership team to resource the project adequately.”

While ISO 45001 training can be logistically challenging to arrange, fortunately, extra solutions are available in addition to the traditional classroom set-up (see Beyond the Classroom).

With more global ports achieving the ISO 45001 standard before the March 2021 deadline, this means a healthier and safer working environment.

With the Port of Port Elizabeth gaining this status in May 2019, port manager Rajesh Dana explained that this would have a

Credit: Port of Melbourne

HIGH STANDARDS

hugely positive effect on boosting safety levels even further.

“ISO 45001 will allow us to control all factors that might result in illness, injury and in extreme cases, death, by mitigating adverse effects on the physical, mental and cognitive condition of our employees, stakeholders and visitors, ensuring zero harm.

"We can honestly say that the time and dedication required to gain this standard have been more than worthwhile and we will be recommending to colleagues throughout the industry to work towards ISO 45001 as soon as possible,” concludes the Port of Blyth's Stuart Balmer-Howieson. “In the meantime, our team will continue to maintain the standard and demonstrate the Port of Blyth's dedication and commitment to Occupational Health & Safety at all times to all of our stakeholder groups.”

8 Murray Newton, Corporate Relations Manager, Port of Melbourne, says that there are many opportunities afforded by the ISO 45001 standard

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OIL SPILL RESPONSE

LACK OF CONSIDERATION IN PORTS NOT SHOWING A SLICK RESPONSE Ports should take a hard look at their oil spill responses – right down to the architecture and options available, writes Stevie Knight

8 Fender cleaning in port, Germany

“Whoever designs ports clearly has no oil spill training,” says Mark Whittington of ITOPF. Beth Esau of Adler & Allan echoes the point: “Sadly there still seems to be little, if any, consideration given to dealing with oil spills even in the construction of modern ports.”

Both agree that an incident is bad enough, but this particular oversight is multiplying facilities' woes. Take, for example, the recent experience of an (unnamed) Atlantic container facility which suffered a refuelling mishap: in bunkering ports, it's the likeliest cause of these incidents.

While the port managed to install a containment boom around the ship, bad weather compromised the barrier's effectiveness and the architecture added to its troubles: “The big problem here is that the quays are concrete slabs on pillars, resulting in an overhang of more than 30m,” explained Mr Whittington.

“For the spill response process, this design's a nightmare, trapping large volumes of oil underneath”, he says. “There were not any access hatches, so we had to feed the oil pick up equipment from the top of the quay, down over the side and back to the wall, but even then, we could only work when we had tidal clearance.”

For similar reasons, breakwater designs with their typical voids “are also an oil trap” he says, and calls for creativity in getting over the issues.

However, it's not just modern facilities that suffer; older ports have challenges with porous - sometimes historic - walls and open wooden piling which can trap oil “releasing a sheen onto the water with each tide for weeks”, says Ms Esau. Despite being just molecules thick, it can be unpleasantly smelly; so public pressure may to be seen to be dealing with it may exist “even if

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very little is being achieved by sometimes costly booming”, she adds.

According to Mr Whittington, change might only need a meeting of minds. “There are things that could help, such as access hatches and incorporating built-in booms. If the architects actually co-ordinated with the oil response people, I'm sure we'd come up with some sensible solutions.”

TIMING Even without these stumbling blocks, response is rarely straightforward.

“It's a common misconception that you can simply position a boom across a harbour entrance or river that leads to a port and it will contain the oil,” says Ms Esau, explaining how this only works for those very few ports with a flow below 0.7 knots.

Yet even if you could, you might not want to. “Closing for a week would result in a massive financial hit,” says Mr Whittington. “So the challenge becomes mounting an appropriate response in the middle of a busy operation.” He adds that clear demarcation, berths dedicated to ship cleaning and so on, will certainly help but there's also the potential for inventive strategies “such as using tugs to create a slow, flushing current” which may be able to move the oil out of problematic locations.

At the same time, it is also important to know when to seek help. While there's a broad range of responses running from the bare minimum to skimmers and trained staff, Ms Esau underlines that each port should be aware of its limits, understanding “at what point it must seek outside assistance” from its emergency contractor.

JULY/AUGUST 2019 | 33

OIL SPILL RESPONSE

That's a pretty difficult target to hit in the heat of the moment, made trickier by the correlation between the speed and the price of the intervention. Obviously business continuity is crucial, but as a general rule, “the quicker it must be done, the more it could end up costing,” says Ms Esau. Further, she advises early communication with the ship's agents and insurers because guaranteed payment of the final cleanup bill “can end up having quite an influence over how a response is conducted”.

PLANS AND OPPORTUNITIES Given the complexity of the decision-making process, Mr Whittington underscores the necessity of having a tailored procedure. “Do not try to cut-and-paste your name onto your neighbour's plan” he advises. “Even ports next-door to each other will be very different.”

Despite this, Fremantle harbour master Allan Gray argues for making sure there's still room for initiative to be a factor.

When a cargo vessel sprang a leak in January, he was worried. “We're at a river mouth and it could have been a disaster, especially as we first estimated five tonnes of heavy fuel oil were involved, it turned out to be closer to 40 tonnes.”

However, observation showed the oil had been caught in a circular eddy, so the team looped a boom around the ship and then in a far trickier operation, under the wharf itself. “Stopping the spill there meant very little got away... and we could scale back our duties to daylight hours. It reduced fatigue levels and kept costs down.”

“I'll admit we had a bit of luck,” says Gray, “but you can train your guys to recognise an opportunity when they see it.”

It's also prompted Fremantle to explore alternatives that Mr Whittington would be proud of: “Anecdotally, we knew that all the garbage ended up in the corner of one particular berth, so we've now decided to put in a standpipe that will suck up the trash and floating oil all the time.” More, after chasing the spill underneath the quay, “the team came up with a system of pulleys and ropes that will draw a containment boom under the wharf,” says Gray and a similar situation “will not require as much manual handling”.

DIFFERENT OILS Ports' oil spills are far more common than the headline-grabbing, infamous ocean slicks, caused mostly by mechanical or process failures. Port spills are smaller, but with the potential for working their way into all kinds of spaces. As a result, in-situ burning is risky and dispersants are not advisable for shallow waters, “as this just sinks the oil onto the seabed,” says Mr Whittington.

Inside the port, the focus is still on mechanical recovery. “Fit your spill equipment to the likeliest scenarios,” he advises. If skimmers and pumps are part of the armoury, “keep up-to-date about what the port is bunkering as this is the main risk - if, for example, it's a heavier oil, you need to have kit that's going to cope”.

However, the consistency of the spills is changing says Ms Esau, especially as marine diesel has mostly taken over from HFO. Although “considered a far less damaging product” it still presents problems particularly immediately after release. The odour leads to understandable concern from the public “and due to its high toxicity, preventing it from being driven into the water column by passing traffic is essential where there are local fishing grounds or shellfish beds”.

Unfortunately, there's another problem on the horizon. The fuels coming in 2020 may well react very differently to those commonly used at the moment, some showing a tendency to emulsify and thicken in water. Mark Whittington says: “There are concerns about responding to the new fuels, but there are

34 | JULY/AUGUST 2019

already Norwegian and Canadian teams focused on it.”

Still, he admits pollution response could be 'interesting' in the coming years as there's “a whole load more fuel formulations in the pipeline”.

8 Oil spill boom

EYES IN THE SKY As stealing a march on events can help stop costs escalating, oil-spill surveillance technology is rapidly gaining ground.

Some emergency response companies are utilising drones to get a good look at what's happening below, but US-based Elastec offers ports a stable, winged helium balloon that can be deployed or retrieved in minutes. The advantage over drones, says the company, is that it will stay aloft for longer and you don't require a licence to fly it.

This would not work so well if it had not been for an evolution in camera technology that can spot the first four litres of a spill, even at night. “These are the future”, says Manuel Pinheiro of Ocean Sea Maritime Services. The kit can be mounted in a boat or even on a VTS mast or crane. In Rotterdam, for example, it's high enough that it can spot oil 12km from the shore.

One thing that makes it especially attractive is its predictive intelligence says Mr Pinheiro: “In a port, our system can read tide and flow and it knows how the seas work around it, so it says, 'right now you need the assets on this spot, in two hours it will be needed over there'. That will make deployment a lot more effective.”

8 Cleaning port infrastructure, UK

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Southampton 201ȟ

COASTLINK REVIEW COASTLINK

Conference

DIALOGUE AND COLLABORATION – THE KEY TO SHORT SEA SUCCESS Short sea shipping has a lot to be optimistic about - provided it can stay competitive by maintaining an air of communication and collaboration.

That was the take home message from this year's Coastlink conference, the pan-European network dedicated to the promotion of short sea and feeder container shipping.

The two-day conference focused very much on knowledge sharing - how delegates, short sea operators, ports and logisticians can best take advantage of future opportunities in the market.

Overall, there was very positive feedback to Mercator Media's inaugural Coastlink conference, the first time it has taken place in six years.

POSITIVE OUTLOOK Day one of the conference saw an interesting variety of speakers with presentations on how the sector can tackle the changing face of European logistics, including economic demands for transportation.

Sarah Kenny, Vice Chair of Maritime UK, delivered the keynote address and talked about how the £40 billion the marine industry contributes to the UK economy. But highly trained and motived personnel need to be engaged to raise the profile of the industry to be ready for a range of trade futures.

“If we want to move forward, the industry needs to sustain, grow and regain,” she said.

Another stand out talk came from Justin Atkin, the port representative UK & Ireland for the Port of Antwerp, who confirmed that the UK & Ireland is the port's second largest trading partner with a 15% growth in the UK & Ireland in the last few years.

He talked about the additional opportunities and how there is a need for transparency in the shipping process through digitalisation.

"The sector needs to prepare itself for the future modal shift in shipping, shifting boxes off the road by rail and inland shipping." he said.

Lastly, he talked about Brexit being a "catalyst to renew operational procedures", rather than a negative and a project that Antwerp is working on called NxtPort, where it is sharing digital data with its stakeholders in order to improve operational efficiency.

The afternoon panel session opened with Andrew Ellis, country manager of Unifeeder UK, who talked about daily challenges to the industry including lack of truck drivers, transport costs, seasonal fluctuations, storage, damage of cargo, CSR & environment and Brexit.

Delegates were given the opportunity to continue the day of interesting debate, discussion and comment into the evening with the conference networking dinner.

THE BIGGER PICTURE Day two of the conference centred around how short sea shippers may benefit or lose out from the Chinese Belt and Road Initiative (BRI) and its potential impact on European shipping.

At a first glance, the initiative could be seen to only affect seep sea shipping, but the speakers said that it will

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inherently, create or re-make links and feeder routes that will have a knock-on effect on the short sea shipping sector.

Gavin Roser, Ambassador at Large of the European Freight and Logistics Leaders Forum, set the scene explaining that China is investing money in infrastructure along but not limited to the silk route.

8 A vibrant panel discussion at Coastlink 2019

The sector needs to prepare itself for the future modal shift in shipping, shifting boxes off the road by rail and inland shipping The question is whether certain countries can pay China back and the challenges that may bring in the future and how it will influence freight decisions.

Some speakers were quick to embrace the opportunities that the BRI will bring.

Krzysztof Zalewski from the Port of Gdansk highlighted that it is the gateway for cargo from East to Central and Eastern Europe for China so he said that it makes economic and political sense for the port to back the initiative. Some speakers though were a little more wary about the influence that the BRI could have on the shipping sector.

Delegates had further opportunity to network at the end of the conference during a tour of Southampton Port's short sea shipping capabilities, kindly hosted by ABP Southampton.

8 Dr. Merv Rowlinson of City University presented at Coastlink 2019

JULY/AUGUST 2019 | 35

ENVIRONMENT

TAKING THE MEASURE OF DUST EMISSIONS Measuring dust is one thing, identifying how much of it is your responsibility is quite another. Felicity Landon reports

8 Invisible dust rules vary from country to country

Air quality debates in the shipping and ports sector are very much focused on NOX, SOX and CO2 right now. But that doesn’t mean dust emissions have fallen off the radar.

For anyone living near a port, clouds of dust from handling cement, grain, fertiliser, coal and other dry bulks are obviously highly visible. Cars and windows coated with dust make the problem personal.

And what of the ‘invisible’ dust? The size of the smallest particle visible to the human eye is 50 microns. When dust solutions expert Richard Posner gives presentations, he starts by focusing on PM10 and PM2.5: “Basically these can really damage the lungs; they are small enough to bypass the nasal membrane and get through the lungs, scarring the lungs and preventing the ability to extract oxygen from the air,” he says.

From country to country, the rules and regulations vary and measuring, or isolating, the precise impact of port operations in generating dust can be tricky.

Take Murmansk and the loading of coal for export. The ‘black attack’, as locals call the coal dust, has been a headache in Russia’s Arctic capital for several years, says Anna Kireeva, head of communications at the Murmansk office of Bellona, an environmental NGO. “In the winter it taints snow banks and ice, creating grey rivers of filth with every thaw. For the rest of the year, the coal paints a black crust on city windows and fouls the air,” she says.

Massive pressure from local people, which included a deluge of letters to the regional ministry of environment, meant that the port had to act, she confirms.

36 | JULY/AUGUST 2019

“When it comes to Russia, there are no precise rules about the dust – and what’s even worse is that sometimes it is difficult to understand the source of the dust. In response to the complaints in Murmansk, the ministry of environment ordered research. They found that 50% of the black dust was coal dust but the other 50% was from the boiler houses (providing district heating), which use mazut, very low-quality heavy fuel oil. When you remove the black and greasy coating from the windows, you can’t tell if it is coal or from the heavy oil.”

Murmansk Commercial Seaport is one of the city’s largest employers, so tackling the problem was a lot about social responsibility, says Ms Kireeva. “There are no strict regulations or any maximum permitted level of pollution from such activities as coal loading. That is why in Murmansk the ministry of environment sort of kindly asked and persuaded the company to take some measures to reduce the pollution. There were no tools or means of influence.”

The ‘black attack’ became a real problem for Murmansk about five years ago, when the volume of coal being loaded increased by three to four times. The coal is delivered to the port by train and exported all over the world. “After massive complaints by the citizens, the local authorities had to act. The port started to buy special tools to spray the water on the coal piles. It was not very efficient, but it was something. At the same time, the port started to investigate foreign experience of combating the problem.”

The port is now building specially designed screens to prevent the dust escaping from the industrial area. The 20-

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ENVIRONMENT

metre-high screens, running a distance of 2km, are one of about 12 projects costing a total US$44m intended to reduce the environmental impact of the port, according to a briefing by the seaport.

“When winter returns, we will definitely see it in the snow whether the pollution is there or not,” says Ms Kireeva.

“Meanwhile, the port is building a huge new terminal on the other side of the bay, which will provide closed coal loading. It doesn’t mean that loading will stop on this side, but they are building a really modern facility.”

Controlling dust from operations at port and terminal facilities has become increasingly important, says Richard Posner, president of Dust Solutions Incorporated (DSI). “We are seeing an enormous amount of attention being paid to dust and a lot of ports are measuring PM10 and PM2.5,” he says.

“These are pretty critical measures at ports and terminals, many of which are less concerned about NOX, SOX and CO2 because they are not producing so much.”

DSI manufactures dust suppression systems for a range of industries, including power generation, mining, mineral processing, aggregate, pulp and paper, wood products, hazardous waste, marine and bulk handling. Its solutions

‘‘

When it comes to Russia, there are no precise rules about the dust – and what’s even worse, sometimes it is difficult to understand the source of the dust

include its Dry Fog System and DustTamer wind fence systems.

DSI has just completed one of the largest wind fence projects in the world, a 27-metre high, 3.5 km long fence for a coal handling facility in Russia, says Mr Posner.

Across the world there is plenty of legislation about controlling dust, he says – but there is not enough enforcement. “People are not enforcing it, or people are getting away with it, or there is not sufficient measuring. In parts of the third world, what we typically see is people paying their fines and effectively paying people off.

8 Operations cannot shut down to measure dust

“In the first world, they pay their fines and start to implement plans to rectify the situation – but it is a long process. If you start to show that you are doing something about it, often you get away with it.”

DSI is active all over the world and legislation does vary dramatically, says Mr Posner. Absolutely you can measure and monitor dust, he says, but it is difficult to isolate where that dust comes from. “It is all to do with the location of where you are putting the monitors.”

The ideal scenario (but unlikely to be feasible in most cases) would be to shut down operations entirely for week, measure what dust is generated in that week and then restart operations and draw the comparisons.

The main dust generators in bulk operations are material handling using grabs and hoppers, open stacks exposed to the wind, and dust thrown up from the road by trucks – although in the case of ports, at least the roads tend to be paved.

While the pressure is often highest to keep local residents happy, Mr Posner says that employees in the port can be forgotten.

“The easiest way to deal with some of the problem is to wear masks – and it is crazy, this infrequent wearing of masks by stevedores and others. Dust can really be detrimental to the local environment, to neighbours and to employees. A lot of the time ports start to do things when the neighbours start complaining. I don’t think they pay much attention to the fact that it also impacts employees – who are seeing this from day to day.”

Guaranteeing Output Parametres?

Balan Velan, managing director of Scorpio Engineering, based in Bangalore, highlights the difficulties of defining and measuring dust.

“What we are talking about is fugitive dust that escapes when grabs open and deposit a load of dry bulk into a hopper in a port,” he says.

“Norms for dust emissions do exist but only for general dust concentration in the atmosphere, particularly at human height levels. Such norms range from 20ppm to 50ppm (parts per million) but this is for dust levels in ambient air at about ground level. What does not exist is how to measure the dust cloud that forms when grabs open and how to determine how much one can reduce this and, if so, what the reduced level should be.

“The issue here is that one cannot measure the initial dust released, so how does one measure the final remedied dust concentration?”

Containment and dust extraction within the area is the solution to dust problems, says Mr Velan. Scorpio’s Dust Cap modules feature suction filters and dust entrapment technology and are designed to be welded on to the top of existing mobile hoppers. The filters evacuate and filter the dust, releasing clean air to the atmosphere.

“In a recent interaction with a customer, they asked us for dust reduction guarantees.

We asked them to tell us what the initial dust concentration was so we could let them know what we could do. They had no answer.

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Without an input parameter how does one guarantee an output parameter?”

He concludes: “There is no available data that tells us what the dust levels are at the point of emission of the dust. What can be done is only to offer guarantees of visual dust reduction so that one does not see such a cloud of dust emanating as the grab opens and dumps the product into the hopper.”

The traditional dust bucket method of measuring dust is ‘pretty crude’ and measures dust fall captured over a month of two, says Mr Velan. “No one can define whether the dust so captured comes from the port operations or from many trucks coming into and out of the port kicking up dust from their tyres.”

JULY/AUGUST 2019 | 37

BOLLARDS

BOLLARDS STRESSED BEYOND CAPACITY Iain MacIntyre outlines how bollard capacities around the world are being stressed by rapidly-increasing newbuild ship sizes and considers the view from insurers Wharf bollard capacities around the world are being challenged and, in some instances, exceeded by the rapid recent increase in newbuild sizes, with concerns consequently raised about the adequacy of processes to inspect, test and maintain such key infrastructure.

The issue came to the fore in New Zealand in February 2017, when high winds led to the 41,865-GT cruise ship Seabourn Encore tearing mooring bollards off the wharf at PrimePort Timaru, with the vessel's stern then swinging across the harbour and colliding with a bulk cement ship.

A Transport Accident Investigation Commission investigation found that the bollards failed because their fastenings to the wharf and underlying wharf structure could not take the force from the ship's mooring lines. Among other observations, it stated that: “Safe and effective mooring of ships depends on port companies knowing the safe working loads for their mooring infrastructure.”

Mott McDonald Australia, New Zealand and Asia maritime practice leader Sam Mr Harris reports a “real mixed bag of responses” to the issue.

“Some ports have taken a very proactive response to the changing nature of shipping and other factors, while others are more reactive to changing mooring requirements as those problems emerge,” he told Port Strategy.

“This is quite understandable given the complexities often encountered for upgrades and an increasingly cautious approach to investment in infrastructure improvements in advance of demand. With such a rapid increase in vessel sizes globally over recent decades, predicting future requirements becomes increasingly difficult to anticipate.

“Often the need for channels/berths to accommodate the physical dimensions of larger vessels - for example, deeper draught and greater ship-to-shore crane outreach - is quite obvious. Enhanced mooring requirements are sometimes less obvious and more complicated to assess and address any shortcomings.”

AECOM ports and marine technical director James Mr Hutchison says all ports seeking to cater for larger vessels must now have assessment of their infrastructure “front and centre of their decision making”.

“The majority of port owners will commission studies to ensure that these larger vessels can be accommodated,” he says.

“This may include condition assessments of existing infrastructure but also structural capacity assessments to accommodate the larger berthing and mooring forces from these larger vessels, as well as whether dredging of berth pockets is required. The strength of wharf bollards is just one component of the port's infrastructure that needs to be considered when larger vessels are contemplated.”

Further complicating matters, many older ports will have bollards for which there is no design load data, observes Beckett Rankine director Tim Mr Beckett.

“Even for new bollards the actual capacity can be less than the rated capacity due to quality control defects - it is not common for new bollards to be proof-tested,” he says.

38 | JULY/AUGUST 2019

“It is not just the bollard and its fixings which are critical but also the structure to which the bollard is attached. There have been several cases of sheet-piled wharf frontage failures due to the load from a bollard overstressing the wall's anchorage ties.

“I am also aware of a mooring dolphin at an oil terminal berth where the steel supporting piles failed in tension at their junction with the concrete dolphin cap under mooring line loading.”

8 Shore-side marine bollard failure can result in vessels being cast adrift, partially or wholly, with dramatic consequences

DETERMINING THE STRENGTH Assessing mooring strength requires appreciation that this infrastructure comprises a system of elements, configuration and operation, says Mr Harris. “The strength of the system is only as strong as the weakest link,” he states, before adding that the range of aspects that consequently need to be understood fall within the following parameters: 5 What infrastructure is in place now?

5 What are the design mooring conditions?

5 What are the future requirements?

5 What practical measures can be adopted to address any shortfall in mooring capacity?

“Knowing the strength of bollards is important, however it only provides partial context. It is possible to proof-test the strength of bollards, but it is very expensive and can cause significant operational disruption. Sometimes this is the only course of action though.”

Mr Beckett says that although the majority of ports “generally know” the rated capacity of their bollards, particularly on berths accommodating larger vessels, it is less common that they will know the degree to which their aging bollard capacity might be reduced by corrosion.

“In the past bollards were tested by the pull from a tug, but this method has gone out of favour as a failure under test could do significant damage to the tug.

“There are a number of firms which offer to test bollards using a hydraulic rig that tensions one bollard against its neighbour.

This is much safer in the event of a failure, but it does not

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BOLLARDS

necessarily test a bollard for a line pull in the direction that a ship would apply it, especially for a large ship which may have very steep line angles. It is, however, very much better than no test.

“Stressing one bollard against its neighbour is not suitable for bollards on isolated mooring dolphins or for mooring hooks which have a limited range of swivel. I understand that there has been some experimental work done on testing bollards and their fixings using ultrasound or similar.”

Mr Hutchison concurs that most ports will have good understanding of bollard strength, but also notes that the safe working load (SWL) - typically stamped on each bollard to indicate its rated load capacity - can only be realised if: 1. The bollard is properly connected to infrastructure to be able to transfer the loads from mooring lines to the wharf structure.

2. The wharf structure is capable of accommodating the combination of mooring line loads imposed on all of the various bollards.

“These are generally referred to as local and global capacities. Bollards are generally only tested when they are new and once they have been installed it is very difficult to actually test them. We are not aware of any ports that test their bollards with a proof load.

“Generally, if there is a concern with a bollard, they are visually inspected and assessed. It is good practice to remove the bollards to inspect the condition of the bolts at deck level, however, it is not known whether this is routinely carried out.

“A problem that has been identified in the United Kingdom involves several examples where cast iron/cast steel bollards have failed before reaching their rated load capacity.

Accordingly, designers are now recommending such bollards be concrete-filled as a precaution.

“Another issue with using existing bollards to accommodate larger or different vessels from the original design is the uncertainty as to what the original designer intended with the horizontal and vertical angles of mooring lines. With larger vessels, these angles can change substantially and may be outside the envelopes allowed for in the original design of not only the bollards but also the wharf structure.”

MAINTENANCE Although observing that the majority of ports would have infrastructure maintenance programmes in place, Mr Hutchison says with regard to bollards specifically that it “would mostly consist of painting”.

“It is important to check the condition of the holding-down bolts - or welds if welded to a steel member - as this is critical to ensure the bollard's rated load can be accommodated.”

Mr Beckett agrees that bollards “generally receive little, if any, maintenance” within such programmes.

“Mooring hooks, being more complicated items of equipment, are generally subject to periodic strip down, inspection and servicing. This attention tends not to extend to testing of the holding-down bolts.”

According to Mr Harris, ports are becoming increasingly aware of the importance of implementing sophisticated asset management plans which are aligned with broader business objectives, “rather than reacting to repairs and maintenance on an ad-hoc basis”.

Sh Shape S hap hape the t e th Future Futu utur ure

tto o

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JULY/AUGUST 2019 | 39

BOLLARDS

8 Mooring bollards have to meet today’s more exacting requirements

“Compliance with ISO 55000 for asset management is increasingly becoming the norm. This extends beyond condition assessment, to taking a targeted and longer-outlook approach to managing maintenance priorities.

“However, this often does not extend to a full assessment of the mooring system as a whole, unless an incident occurs or an upgrade requirement presents itself. We are seeing a much greater level of proactivity though.”

REVIEWING INFRASTRUCTURE IN PREPARATION FOR NEW CALLERS Ports with sophisticated asset management arrangements will be more readily able to flag requirements for mooring upgrades ahead of receiving larger-calling vessels due to their existing mooring limitations being better understood, continues Mr Harris.

“In many jurisdictions, we are seeing governments put an obligation on port owners to develop long-term masterplans for their assets. We have supported a number of ports though this process, which requires an evaluation of future trade and fleet requirements and how their infrastructure and operations must adopt to these changes over time.

“These plans are live documents that need to be updated regularly to respond to changing outlooks. This provides a great opportunity to identify these issues early and to put in place programmes of works to address these proactively over time in advance of the challenges of accommodating bigger ships.”

Mr Beckett notes that some ports have structured infrastructure auditing/testing programmes in place that are automatically

triggered ahead of receiving a first call from a larger vessel. When undertaking a mooring assessment for an “oversized” ship, for example, he says a wind limit may be imposed in order to keep mooring line loads within bollard capacity.

Adds Mr Hutchison: “Most ports would not allow larger vessels to call in the first place until checks on capacity of their infrastructure to accommodate these larger vessels were completed. The issue then becomes a matter of how thorough those checks should be.”

NEW TECHNOLOGY Regardless of any new technological developments in the construction of bollards, mooring loads will still need to be resisted as well as also accommodated by the wharf structure, with the bollards “simply a localised transfer point”, emphasises Mr Hutchison.

“Forces from the mooring of vessels are largely horizontal and offshore, which are the worse kind of loads to deal with.

“There are alternatives available, such as the magnetic or vacuum mooring systems, which have advantages over conventional bollards such as reduced time for securing vessels alongside and associated reduction in labour costs.

However, the total mooring load from a vessel remains the same and still needs to be accommodated by the wharf structure, albeit via different load paths.”

Noting “there is no silver bullet - yet!”, Mr Harris says designing bollards to accommodate a wide range of conditions leads to very expensive infrastructure solutions.

Insurer’s perspective Allianz Global Corporate & Specialty's global head of marine risk consulting, Captain Rahul Khanna, and ports and terminals underwriter Simon Keenan, state unequivocally that ports must know if their bollards can withstand the loadings of ever-increasing vessel sizes.

While they advise this has “always” been an important area of consideration to insurers, they also note the impact of vessel sizes having exponentially increased over the past decade or so, especially in the container and cruise ship sectors.

“A failure of bollard and consequently the mooring lines on it could result in a vessel breaking off its berth and result in a very serious casualty,” collectively advise Captain Khanna and Mr Keenan.

“We have seen such incidents in the past and this concern is growing, especially as the consequences can be very costly, including loss of life.”

40 | JULY/AUGUST 2019

An overall observation they share is that given the infrastructure of many ports around the world was built in the pre-WWII era, records of bollard strengths are often not available.

“In many ports, the testing and regular maintenance of bollards is a low priority in spite of it being the key infrastructure of the port. This is clearly a big concern, as safe mooring of vessels depends upon understanding what loads can be safely taken by such bollards, especially in bad weather.”

Nonetheless, the pair believe insurers would generally not seek to interfere with the workings of a port by themselves prescribing programmes for auditing, testing and maintenance of such infrastructure.

“We expect them to follow good industry practices on testing and maintenance and there are implied warranties in an insurance policy.

“Having said that, insurers like Allianz, who have an in-house risk consultancy function, do make it a point to advise their clients of best practice processes and assist them in formulating adequate procedures for checking, testing and maintenance of such structures.”

Ultimately, conclude the pair, it is vital that safe mooring practices are enforced by ports, including monitoring if the maximum number of mooring lines that can be placed on each bollard is not exceeded.

“We have often seen this process ignored and it has resulted in bollards been uprooted in high on-shore winds.

“Our advice would be to engage experts to reassess the breaking strengths of all mooring structures in case of any doubt and if proper certification is unavailable. There are new non-destructive technologies available in the industry for testing of bollards and these should be used when possible.”

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BOLLARDS

“If anything, we are seeing an increased emphasis to provide refined designs for a well-defined design basis.

“There are plenty of new technologies though which provide exciting solutions to many problems we encounter in mooring vessels. Each solution helps manage vessel motion, although presents its own new challenges and there are not blanket solutions for all situations.”

Mr Beckett concurs that ports will prefer to invest in bollards designed specifically for the needs of their vessel callers and will be unlikely prepared to pay for over-design of a facility.

“The development of auto-mooring systems may reduce the reliance on bollards in certain locations, but these are likely to be limited in number since auto-mooring equipment is much more expensive than bollards.

“The development we, as designers and specifiers, would like to see is improved quality assurance procedures for the manufacture of bollards, so it gives confidence that the actual capacity is no less than the rated capacity.”

PARTING THOUGHTS In conclusion, Mr Harris implores ports to take a long-term view of the future requirements of their infrastructure.

“This is not a static outlook and will evolve over time.

However, a port masterplan provides an opportunity to take stock and evaluate the adequacy of your existing infrastructure to meet future needs.

“Increasing bollard capacity can have knock-on impacts though the quay structure. The whole mooring and quay wall system need to be considered together.

“We have seen instances where higher-capacity mooring/ berthing equipment has been installed on infrastructure not designed to accommodate it and other instances where the

existing bollards are not appropriate for the moored vessel conditions. Both situations should really be avoided.”

In addition to regular inspection and assessment of bollards - including removing bollards where possible to inspect holding-down bolts - assessment of the overall capacity of wharf infrastructure should be a priority, concurs Mr Hutchison.

“It is extremely important to understand the limitations of how larger vessels can be moored alongside existing wharf structures and this is ultimately governed by the ability of the wharf structure to resist these loads.

“Dynamic mooring assessments can be undertaken using software such as Optimoor and TermSim, which, if undertaken in consultation with port operators/pilots/shipping lines to confirm the number, type and size of mooring lines and how these are configured through the fairleads back to winches on the vessel's decks, provide greater certainty of the mooring forces compared to conventional static-based assessments.

“These dynamic mooring assessments can target bollard limits to determine limiting wind speeds before a vessel must leave the berth. It is important to note that the largest vessel may not necessarily generate the maximum individual bollard forces because a smaller vessel with a lesser number of mooring lines may do this, hence why it is important to check a range of vessels, not just the largest.”

Adds Mr Beckett: “Be careful where you purchase your bollards and always ensure that there is independent and dependable verification of the manufacturer's quality control.”

8 AECOM ports and marine technical director James Hutchison

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TUGS & TOWAGE

TUG DESIGNS MATCH INNOVATION WITH POWER Ship sizes are increasing and this means innovative tug-handling capabilities are needed at ports. Dave MacIntyre investigates current tug options and possible future trends

8 Fairplay Towage is active worldwide with seagoing tugs, offshore and salvage business

With ship sizes continuing to increase, ports and terminals need to urgently address their tug-handling capabilities to ensure the continued safe guidance of vessels.

Ports cannot easily change the size of their wharves, approach channels and turning basins. Therefore, innovations in tug design are having to respond to demands for more power and greater manoeuvrability, more safety features and the embracing of sustainable, lower-emissions propulsion.

An example is shipbuilder Keppel Offshore & Marine, which is developing its first autonomous vessel - a harbour tug to be operated by Keppel Smit Towage in Singapore.

The vessel will involve modifying a 65-tonne bollard pull tug by retrofitting systems such as position manoeuvring, digital pilot vision and collision detection and avoidance. An onshore command centre will remotely control the tug.

Another company working on innovative designs is Crowley Maritime/Jensen, which has produced a hybrid diesel/dieselelectric propulsion system.

Jay Edgar, Vice President Engineering Services, says there is increasing interest in hybrid, diesel electric, battery power and integration of high-efficiency “green” technologies (LNG, hydrogen fuel cells, etc.).

Crowley/Jensen's response has been to maximise bollard pull in compact tugs with simple, robust systems, efficient fendering and precise control systems to support manoeuvring in tight quarters.

“From our perspective, demand for new tugs is driven by the need to service larger ships in existing ports, increasing awareness of emissions as no-discharge zones become more common and ongoing need for low-cost, powerful solutions that minimise impact on ship-handling fees/rates,” says Mr Edgar.

This demand has led Crowley Maritime/Jensen to focus on the use of lower-powered main engines but incorporating electric motor “boost” to match higher power needs in the hybrid tug Delta Theresa.

42 | JULY/AUGUST 2019

“Hybrid” refers to a system of direct diesel and diesel electric power. The technologies facilitating this hybrid system are multiple input thrusters and integrated control systems that allow seamless transitions between operating modes (dieselelectric “manoeuvring” mode, diesel-only and combined diesel/diesel-electric “boost” mode).”

Looking at future innovations, Mr Edgar says: “We see a trend towards increasing power levels in smaller boats, which requires careful exploration of stability and operability/control.

Increasingly, we see requests for remote supervision/logging of machinery condition and operating data to support predictive maintenance programmes and trend monitoring.

“Autonomy is definitely receiving a lot of attention and although it is not currently impacting the basic design of the tug itself, it is exciting to see developments that can improve situational awareness and coordination of multiple vessels on a particular task.”

The Damen Group also sees increasing desire for renewable energy propulsion, such as LNG or hybrid, but warns that the significant CAPEX increase means the acceptance of such solutions is still limited.

“The main aspects for the next couple of years are safety, sustainability and efficiency. All concepts and technologies developed will have to bring added value in one of these aspects,” says Damen Product Manager Tugs, Dirk Degroote.

“We are actively working on technologies such as digitisation, as this will enable fuel consumption optimisation and improve maintenance towards full predictive maintenance (data analysis). We are working on further automation and integration onboard, to enable the captain and crew to see the right information at the right time though an optimised human/machine interface.

“The next step is to integrate all of this towards giving advice to the captain on things like stability and performance and limitations of the vessel, to increase safety.”

For the latest news and analysis go to www.portstrategy.com/news

TUGS & TOWAGE

8 Novatug's Carrousel Rave tug has an innovative ring design

Mr Degroote says autonomous tugs are not a goal in itself for Damen but adds, “The technologies to get there could be of great value with regards to safety and efficiency and should therefore be implemented independent of the fact if the tug is autonomous or not.”

Another important factor, says Damen, will be the standardisation principle, especially digitisation.

“Not standardising will mean a big hurdle for analysis and might even prove commercially not viable.”

OPERATOR PERSPECTIVE From the operator perspective, Fairplay Towage is one of Europe's leading tugboat companies, running a fleet with various types of propulsion. Managing director Walter Collet says that with a harbour fleet up of to 100 tonnes bollard pull, it is well-placed to handle the biggest vessels calling.

The main factors that prompt Fairplay to start thinking about a new tug are expansion to other ports, organic growth or replacement.

Asked how Fairplay goes about selecting a manufacturer/ shipyard, Mr Collet says: “Quality is the biggest issue. Cost, of course, is an issue but quality of shipbuilding and components is for us more important.”

Of future trends, he adds: “We do not believe in full autonomous tugs in the near future. For the time being we will upgrade our tugs as much as possible but we believe in manned tugs.

“The newest trend we can see is a design from Novatug.

They designed a carousel tug which can be a game changer.

The abilities of these tugs and safety at high speed is groundbreaking.”

The tug to which Mr Collet refers is the Carrousel Rave Tug (CRT). Novatug has placed a towing point on a steel ring, freely

rotating around the superstructure of the tug. Towline force alone cannot capsize the tug.

Combined with Voith propulsion, the tug can use its own hull to create lift for braking and steering, providing enhanced control over assisted ships while they are moving.

Julian Oggel, Managing Director of Novatug, says tug design should be about addressing the needs of ships during their port call turnaround and to satisfy trends such as scale, speed, safety and sustainability.

“Ports around the world are confronted with ships that are bigger than what the port was designed to deal with. The solution for this problem is either to make the port bigger, by investing in the construction of fixed infrastructure and dredging, or increase the control over the visiting ships so that you simply need less room. The CRT is that latter solution.”

Mr Oggel says the traditional response to install more power in tugs does not help as the standard “static bollard pull” metric is not a good proxy for what a harbour tug is supposed to do, namely control a tow in a confined environment.

“The paradox that a ship coming into a port needs to steer as well as come to a full stop is not solved by a tool optimised for static pull only. Steering with a ship after all requires not stopping. This problem is exponentially worsened with very large ships, also because their wind surface is such that slowing down makes the problem of control even worse.”

Mr Oggel says Novatug is also looking at applying IT solutions with artificial intelligence so that the services can be made more modular with smaller tugs operating in swarms and being operated remotely.

“Fully-autonomous tugs will in our view not become a reality for the foreseeable future, but all the systems can be made to cooperate with people much more intelligently.”

Nelson Goes for More Power New Zealand's Port Nelson has dug deep to keep up with the demands of bigger vessels.

The port's investment programme has included the recent purchase of a 70-tonne bollard pull Damen 2411 tug - the Huria Matenga ll - following the purchase of the 52-tonne bollard pull Toia in 2016.

Port Nelson Chief Executive Martin Byrne says bigger visiting vessels, plus inquiries for the future, means that the port needs to increase the bollard pull available for pilots.

“We also took into account our operating

draft limits and the reality that these are unlikely to change greatly going forward, as the cost to increase these would make such a project unviable.

“This tug purchase certainly puts us in a much stronger position than we would be in, had we not purchased it.”

Operations General Manager Matt McDonald says the largest regular container vessels calling were in the 240-metre range.

With the greater towage power Nelson will be able to increase this to 260-270-metre ships.

For the latest news and analysis go to www.portstrategy.com/news

He says Nelson chose a standard Damen 2411 build with minor customisations, primarily a gangway mounted on the vessel to help the crews get on and off, given the large local tidal range.

“We chose just to negotiate with Damen based on our positive experience in 2016. We also wanted to achieve a level of consistency across our fleet for training, operations etc.

“There are a number of other Damen 2411 tugs on the New Zealand coast and we also see this consistency as a positive.”

JULY/AUGUST 2019 | 43

PENSIONS ACT

PENSIONS: THE IMPORTANCE OF BEING RELIABLE FOR PORT INDUSTRY A good company pension can make a difference in the quality of employee an employer might be able to attract, but the key is reliability, writes Alex Hughes “Nowadays, pensions are a critical part of the [overall] employee benefits package in the UK. This is because, since 2012, all employers have had to enrol their employees into a pension scheme as a result of auto-enrolment legislation,” says Ensign Chairman Rory Murphy. “Furthermore, we have witnessed very few people choosing to opt out of a company pension scheme, because tax advantages and employer contributions make it a great way of saving for the future.”

Typically, only larger employers in the UK operate single Defined Contribution trust-based pension schemes in-house due to the costs involved. Most employers seek to reduce the regulatory burden associated with such schemes and are therefore turning to group personal pensions (through an insurance company), or to specialist providers that already have high-quality industry focused schemes available at a fraction of the cost.

Significantly, while all employees meeting a standard series of criteria can be automatically enrolled in their company's pension scheme in the UK, they can also easily opt out if they wish to stop paying into this, although few choose to do so.

According to Mr Murphy, for the employer, being able to offer a high quality, low-cost pension can be a major weapon in its armoury, forming part of a benefits package that enables it to edge ahead of competing organisations in attracting and retaining top talent. Improved employee morale, perceptions of value and a sense of inclusivity will all also serve to help lockin the brightest and the best.

‘‘

Being able to provide a good quality third-party scheme will also provide a solution to the consolidation of a company and, in turn, its pension scheme Rory Murphy, Ensign

“In a survey we carried out with both employers and employees last year, we found that 96% of employees find a good pension scheme 'very or quite' important,” he notes.

Nevertheless, he stresses that employees must always be careful of the charges that pension schemes apply, as these can have a dramatic impact on the overall money being saved.

This is where the maritime industry is at an advantage. Ensign, for example, is a not-for-profit industry wide scheme that not only looks to maximise returns for its pension-holders, but has one of the lowest management charges applied - well below half of the industry cap.

As for the level of contributions, as of April 2019, employers in the UK must now pay a minimum of 3% of their employees salary into a pension and employees 5%, resulting in a total of an 8% contribution to the pension pot.

“In general, most employers in the Ensign pension plan offer a minimum joint contribution of 10%. This is split by the employer

44 | JULY/AUGUST 2019

paying a minimum contribution of 6% and the employee paying a minimum of 4%. However, both employees and employers should be aware that individuals should be saving 20% of their earnings each year to achieve the same income in retirement that current retirees receive,” says Mr Murphy.

YET COMPLICATIONS STILL REMAIN. While consolidation amongst shipping and maritime companies is now common, one of the biggest obstacles to this happening is the management of pension schemes, with Mr Murphy noting that corporate deals often break down due to the pension liabilities on the books of the companies involved.

“A pension deficit is a debt, and any company with a debt on the scale of some pension deficits makes that business a much less attractive proposition for potential buyers or partners. And any firm that enters into a potential corporate transaction without taking this into account could be in for an uphill struggle. Additionally, there are strict regulations surrounding pension debt and the ways in which it can be treated in mergers and acquisitions,” he says.

In other countries, some port companies have struggled to manage pension deficits.

In Brazil, for example, solving problems linked to the port workers' pension fund, Social Security Institute Portus, is broadly recognised as the biggest challenge facing the senior management of the São Paulo State Docks Company (Codesp). In fact, the planned public offering of shares in Codesp and its future reorganisation very much depend on this major issue being solved.

Details of the position at Portus came to light during a recent

8 Low-cost pensions can be a major weapon when seeking top talent

8 Rory Murphy is chairman of Ensign

For the latest news and analysis go to www.portstrategy.com/news

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PENSIONS ACT

‘‘

A pension deficit is a debt, and any company with a debt on the scale of some pension deficits makes that business a much less attractive proposition for potential buyers or partners.

And any firm that enters into a potential corporate transaction without taking this into account could be in for an uphill struggle.

Additionally, there are strict regulations surrounding pension debt and the ways in which it can be treated in mergers and acquisitions Rory Murphy, Ensign presentation of the performance of the first 100 days of the new management team at the port company. The Board of Directors, headed by the president Casemiro Tércio Carvalho, revealed that the fund is short by around $770 million, of which 50% is now in the form of debt owed by Codesp. Some 4,000 members are currently beneficiaries of the fund and 385 retired members draw on it.

Mr Tercio explained that there is a plan in place to avoid Portus having to be wound-up. This mainly involves the central government making a significant financial contribution to the fund. Everandy Cirino dos Santos, the president of the Union of Port Administration Employees (Sindaport), reveals that a proposal to help save the fund has been prepared by a consulting firm and approved by those concerned.

“We will make some changes and present them to the government. We want the financial situation of Portus to be resolved as soon as possible,” he says.

To avoid this type of problem, the UK makes it possible for workers to sign up to third party pension schemes run by

8 Important that employees supported in recognising value of a good pension

experienced maritime pension experts. These can dramatically reduce costs for the employer, and provide a reliable option for employees.

“Being able to provide a good quality third-party scheme will also provide a solution to the consolidation of a company and, in turn, its pension scheme. A third-party industry-wide scheme will allow for every member's pension to stay intact since the scheme will not be a part of the business itself,” stresses Mr Murphy.

He adds that the UK maritime industry is fortunate that it has its own ready-made, not for profit, industry-wide Defined Contribution pension, which over 65 maritime employers have already signed up to - Stena being the most recent example.

“It is a high quality, low-cost, pension proposition run by and for those in our industry. As such, it ticks the right boxes for employees who recognise the value of a good pension, while helping employers to manage the cost of providing it,” he says.

In fact, in Mr Murhpy's opinion, like any benefit, or developmental tool, pensions help a workforce feel valued and looked after and should be treated as such.

“Current and potential employees want to feel as though the company they choose to work for is investing in them and, just like training, pensions can be used as a tool to reassure workers that they matter,” he says.

8 Casemiro Tércio Carvalho, president of Codesp

The state provides In France, all pensions are paid on a public basis, notes Laurent Mouillie, commercial director of Port-la-Nouvelle.

“In effect, the active workforce pays taxes that fund retired people. So, when we retire we receive pensions,” he says.

Pensions do not necessary correspond to what active people have paid during their life and there are certain discrepancies that the government does wish to amend. Changes might mean that people have to wait longer before they can retire, but, basically, the rules will remain the same for all workers.

At the same time, some private companies do make available an additional private plan

46 | JULY/AUGUST 2019

for their employees, while individuals are also free to make private arrangements to receive an extra pension.

So, while in some countries, the offering of a private pension scheme by an employer might make a radical difference in the way that employer is viewed by the workforce, in France, the vast majority rely on a state pension to cover their needs when they retire.

“Pensions based on banks or financial funds are only optional or [perhaps seen as a] bonus from employers,” says Mr Mouillie.

In Finland, the situation is broadly similar, although the onus passes from the state to the employer in providing a basic pension.

Rauli Pohjola, personnel director at terminal operator Steveco, notes that employers must take out statutory pension insurance for all their employees.

“In practise, the employer takes out insurance on behalf of the workforce, deducting their contribution from wages and paying them to a pension provider. This all is based on legislation and covers all workers,” he says.

He concedes that there has been a lot of public discussion about the future durability of this system, this is currently how the situation works in Steveco, which doesn't offer an additional in house pension scheme to employees.

For the latest news and analysis go to www.portstrategy.com/news

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JULY/AUGUST 2019 | 47

PRODUCTS & SERVICES: DIRECTORY

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Over 40 years experience constructing and manufacturing a wide range of grabs, including electro-hydraulic grabs (with the necessary crane equipment) radio controlled diesel hydraulic grabs, 4, 2 and single rope grabs all suitable for bulk cargo.

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48 | JULY/AUGUST 2019

Sany Europe GmbH SANY offers reliable quality container handling trucks.

Benefit from the experience of over 4,000 reach stackers build over the last 12 years, with up to five year full machine warranty.

Sany Allee1 D-50181 Bedburg Tel: +49 2272 90531 100 Email: info@sanyeurope.com www.sanyeurope.com

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S IDELIFTER/SIDE LOADERS

Orts GMBH Maschinenfabrik

ShibataFenderTeam Group ShibataFenderTeam is one of the leading fender manufacturers with 50+ years of group experience and an extensive global network.

As a specialist for customized fender solutions, they focus on vertical integration with in-house manufacturing and full scale testing, offering high quality products at competitive prices.

SFT offers the full range of marine fender products. info@shibata-fender.team www.shibata-fender.team

P OWER TRANSMISSION

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Liebherr-MCCtec Rostock GmbH

MRS Greifer GmbH

VISY Oy VISY takes pride in solving operational problems, specialising in gate automation and access control solutions in ports and terminals. Their solutions streamline processes resulting in saving money and increasing productivity.

Tel: +358 3 211 0403 Email: sales@visy.fi Web: www.visy.fi/

M ARINE FENDERS

info@alimak.com www.alimak.com

Künz GmbH

90 Fenchurch St London • EC3M 4ST Tel: +44 207 204 2635 london@ttclub.com www.ttclub.com

I T PORT AUTOMATION

Alimak, the leading manufacturer of rack and pinion elevators, have been successfully servicing ports since the early 1970s with close to 3,000 elevators installed, providing easy access for crane drivers, which enhances productivity and profit. Today, the company’s crane elevators are installed in almost 100 countries around the world.

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The TT Club is the international transport and logistics industry’s leading provider of insurance and related risk management services.

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Conductix-Wampfler The world specialist in Power and Data Transfer Systems, Mobile Electrification, and Crane Electrification Solutions.

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Rheinstrasse 27 + 33 Weil am Rhein 79576 Germany Tel: +49 (0) 7621 662 0 Fax: +49 (0) 7621 662 144 info.de@conductix.com www.conductix.com

Hammar Maskin AB Hammar Maskin AB is developing, manufacturing and marketing Sideloaders, also known as Sidelifters, Swinglifters or Self loading trailers, under the brand name HAMMAR™.

Buagärde 36, Olsfors 517 95 Sweden Tel: +46-33 29 00 00 Fax: +46-33 29 00 01 info@hammar.eu www.hammar.eu

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PRODUCTS & SERVICES: DIRECTORY

Bromma is the industry’s most experienced spreader manufacturer, known worldwide for crane spreaders of exceptional reliability.

Today you find Bromma spreaders operating in 97 out of the top 100 ports worldwide.

Malaxgatan 7 , P.O. Box 1133 SE-164 22 Kista, Sweden Tel: +46 8 620 09 00 Fax: +46 8 739 37 86 sales@bromma.com spareparts@bromma.com

Coda Octopus is a global leader and specialist in underwater technologies.

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The Brain of Logistics With more than 30 years experience in IT Solutions and Business Operation Consultancy DSP offers a large portfolio of professional services and products to support terminal operations processes and system.

DSP Data and System Planning SA Via Cantonale 38 6928 Manno, Switzerland Tel: +41 91 230 27 20 Fax: +41 91 230 27 31 info@dspservices.ch www.dspservices.ch

Master Terminal TOS from Jade Logistics solves the complex problem of managing a variety of mixed cargo within one system, providing the agility you need to manage your port. Designed to cater for all cargo types, it is the TOS of choice for mixed cargo terminals.

5 Sir Gil Simpson Drive Christchurch 8053 New Zealand PO Box 20152 E: info@jadelogistics.com W: www.jadelogistics.com

Solvo Europe B.V. Solvo’s software solutions such as TOS or WMS help container and general cargo terminals take full care of their cargo handling processes and make sure the clients expectations are exceeded.

Prinses Margrietplantsoen 33, 2595AM, The Hague, The Netherlands Tel: +31 (0) 702-051-709 Email: sales@solvosys.com www.sovosys.com

TGI Maritime Software is a Terminal Operating System editor and integrator specialized in the support of Small to Medium Terminals. Its expertise is built on 34 years of experience within the maritime sector. TGI provides comprehensive services to its customers all along their projects. OSCAR TOS and CARROL TOS have already been successfully handled by 40 container and RoRo terminals worldwide.

Tel : +33 (0)3 28 65 81 91 contact@tgims.com www.tgims.com

Providing complete solutions for your container cranes Refurbishments & Upgrades – Maintenance – Training – Inspections & Audits – Safety Lashing Cages – Spares & Service Support www.wcs-grp.com/ info@wcs-grp.com T: +971-4-8838980

T RACTORS

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ELME Spreader AB ELME Spreader, world’s leading independent spreader manufacturer supports companies worldwide with container handling solutions that makes work easier and more profitable. Over 18,000 spreaders have been attached to lift trucks, reach stackers, straddle carriers and cranes.

Stalgatan 6 , PO Box 174 SE 343 22, Almhult, Sweden Tel: +46 47655800 Fax: +46 476 55899 sales@elme.com www.elme.com

Worldwide: +44 131 553 1380 sales@codaoctopus.com US +1 863 937 8985 Salesamericas@codaoctopus.com www.codaoctopus.com

Navis understands that as ships get larger and operational processes become more complex - efficiency, collaboration and productivity are essential. As a trusted technology partner, Navis offers the tools and personnel necessary to meet the requirements of a new, and ever-evolving, global supply chain.

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T ERMINAL OPERATING SYSTEMS

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MAFI Transport-Systeme GmbH Specialised in the development and production of heavy-duty equipment for transporting containers, semi-trailers, cargo/roll trailers and special container chassis in ports and industry.

Hochhäuser Str 18 97941 Tauberbischofsheim, Germany Tel: +49 9341 8990 sales@mafi.de www.mafi.de

Terberg Special Vehicles develops and manufactures customised tractors. Our terminal, RoRo, industrial and road/rail tractors operate in ports, distribution centres, shunting yards, industry and construction sites worldwide.

We believe efficient operations depend on high quality, easy maintenance and operator comfort.

Benschop – The Netherlands Tel. +31 348 45 92 11 terbergspecialvehicles.com

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JULY/AUGUST 2019 | 49

POSTSCRIPT

HAMBANTOTA: STILL A QUESTION OF DAMAGE LIMITATION?

Sri Lanka has signed a memorandum of cooperation with India and Japan to develop the new East Container Terminal in Colombo.

The move is seen as a push back against China’s major influence over port sector development in Sri Lanka to-date which includes the sorry tale of the development of the new port of Hambantota. But now under Chinese ownership will more damage limitation be required in conjunction with Hambantota port?

50 | JULY/AUGUST 2019

China is getting touchy that its signature Belt and Road Initiative, via which it is expanding its global footprint in the maritime ports sector, is being increasingly criticised for having a strong geo-political dimension to it. And particularly that its funding of port developments can lead to a corrosive debt trap, one where the failure of host nations to keep up financing payments will see the port concerned transition to full control by China.

It has particularly refuted such a contention recently, via sympathetic media outlets, in conjunction with Hambantota port in Sri Lanka, a port widely cited as having been built without any solid economic rationale to it and more based upon the close relationship between China and Mahinda Rajapaksa, who served as President of Sri Lanka from 2005 to 2015 and who since 2018 has held the post of Sri Lanka’s leader of the opposition party. In effect it is suggested that China brought this project to life, scaling it up in the planning stages and the associated debt, capitalising on extensive political and military support previously delivered to Rajapaksa as well as his aspiration to do something big for his home town of Hambantota, a sparsely populated area on Sri Lanka’s southeast coast.

Hambantota port formally opened in November 2010, on the occasion of Rajapaksa’s 65th birthday. It never gained traction with only 34 ships calling in 2012 compared to over 3500 ships in Sri Lanka’s main port of Colombo. Despite this Rajapaksa authorised further expansion with more funding from China with a racked up interest rate which also applied to earlier funding – 6.3 per cent. Still no meaningful business arrived at Hambantota port and with Rajapaksa being voted out of office in 2015 the new administration considered the only viable course of action was to strike a deal with China which eventually resulted, at the end of 2017, in the port passing to Chinese control. This, in turn, has raised concerns about a possible Chinese military presence materialising in Hambantota, despite the fact that the agreement governing the 99-year lease of the port to China, under which China Merchants has an 85 per cent equity stake and Sri Lanka 15 per cent, currently prohibits the port from playing a military role.

8 Is there a further twist in the sorry tale of Hambantota port round the corner?

As informed observers put it: “governments can change and they can change agreements.” An observation potentially given more relevance by the fact that Mr Rajapaksa is now, with some success, presiding over a political comeback, although it may be his brother, Gotabaya Rajapaksa, who takes up the figure head role of president.

The current Sri Lankan government has, however, recently taken action which can be seen to be designed to counter Chinese influence in its ports sector – the signing of a ‘memorandum of cooperation with Japan and India to jointly develop the East Container Terminal in Colombo Port. It is envisaged that Sri Lanka will hold a 51 per cent stake and the other joint venture partners 49 per cent in the project which will include operating the terminal. Whether there is a business case for such a terminal of course remains to be proven!

TWIST IN THE TALE? The story of the Chinese presence in Hambantota port is, however, is in effect just beginning and China Merchants as a commercial entity with substantial container handling experience and links to Chinese Ocean carriers as well as the France-based CMA CGM group as the major shareholder in the port must be considering its options.

Hambantota Port has been designed to be able to handle high capacity container vessels and as such while there is little in the way of local cargo to attract carriers to it there is the possibility of commencing transhipment operations especially with the China Inc.’ style approach that has underpinned China port developments elsewhere for example Piraeus in Greece. But if this is the goal then where will this cargo come from, what will the impact be on Colombo port, a major transhipment hub, and will it prove to be yet another damaging episode prompted by the presence of a port widely judged to be not necessary in the first place?

For the latest news and analysis go to www.portstrategy.com/news

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